A fifth of chief executives cut jobs as sales decline
About a fifth of chief executives of private sector firms reduced jobs in the three months ended March
What you need to know:
- Firms in the manufacturing sector were the most hit, with 45.5 per cent of CEOs surveyed saying they had seen a drop in demand for their goods
- The January to March period had seen the majority (60.7 per cent) of CEOs keep their numbers unchanged while just 16.8 per cent hired more workers.
About a fifth (22.4 per cent) of chief executives of private sector firms reduced jobs in the three months ended March as weak demand for goods and services persisted.
The Central Bank of Kenya (CBK) survey that targeted CEOs of over 1,000 private sector through direct online questionnaires showed the job cuts came on the back of a third (33.6 per cent) of the surveyed businesses posting a fall in sales in the review period compared to the previous three-month period ended December 2023.
Executives drawn from diverse sectors including manufacturing and agriculture are also painting grim pictures for job seekers in the current second quarter of the year. About 19.6 per cent of them told the CBK they expect to cut their headcount in the three months ending June.
Sales declined
The January to March period had seen the majority (60.7 per cent) of CEOs keep their numbers unchanged while just 16.8 per cent hired more workers. In the current quarter, 63.6 per cent expect to keep their staff count unchanged while just 16.8 per cent see chances of hiring.
The CBK survey shows while a third of the CEOs had seen sales decline in the first quarter, 32.7 per cent of the businesses did not see any change in sales even as another 33.6 per cent posted increased sales compared with the three months ended December 2023.
Firms in the manufacturing sector were the most hit, with 45.5 per cent of CEOs surveyed saying they had seen a drop in demand for their goods while a further 18.2 per cent saw no change. A third (33.3 per cent) of CEOs leading firms in the agricultural sector posted a decline as 27.8 per cent of those in the services sector saw reduced demand.
Increased cost of production
“Business activity in the manufacturing sector remained subdued, largely due to the low consumer purchasing power and the increased cost of production, particularly cost of energy and credit,” said the CBK in the survey. The survey usually targets CEOs of key private sector organisations including members of the Kenya Association of Manufacturers, Kenya National Chamber of Commerce and Industry and the Kenya Private Sector Alliance.
In terms of employment, 40 per cent of respondents employed less than 100 employees, while 29 per cent of respondents hired over 500 people.
The CBK findings, when compared to those released last December, show that the manufacturing sector remains the most affected when it comes to reduced demand for goods.
“Most respondents in the manufacturing sector expect business activity to either remain the same or increase, largely driven by seasonality factors. Firms expect to utilise their existing idle capacity to meet the demand,” the survey said.
