Private firms see fewer new jobs over inflation

Private sector chief executives expect their companies to hire fewer people in the rest of the year due to a tough economic environment that has raised costs and cut turnover, a new Central Bank of Kenya (CBK) survey shows.

The pessimistic outlook is, however, not shared by bank CEOs, who anticipate more hiring in their industry which has so far this year shown a better profitability compared to non-bank sectors.

The CBK poll, which was done last month ahead of the August 9 monetary policy committee meeting, found that 70 percent of non-bank respondents don’t expect to hire more workers in the second half of the year.

This is higher than the 65 percent of those who in March had indicated they did not see new hiring coming in.

In March, 12 percent said they definitely expected to hire new staff, but this number dropped to six percent in July.

Businesses have seen higher inflation raise their input costs, while a weaker shilling against the dollar has also raised the cost of imported raw materials and products.

This has hurt sales as consumers —who have also been hit hard by inflation— find it harder to afford the goods and services on offer.

“Non-bank respondents were more cautious about creating new jobs due to low business turnover, expected low production volumes, harsh economic environment, high cost of living and the need to optimise the existing workforce to contain operational costs, and high cost of production due to increase in prices and, in some cases, scarcity of inputs,” said the CBK in the market perceptions survey for July.

The CBK survey targeted CEOs and other senior officers of 354 private sector firms.

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