250 CEOs announce plan to reduce workforce over high cost of doing business in the country according to Central Bank of Kenya report.
Due to the increasing cost of doing business, more than 250 Chief Executive Officers (CEOs) have declared plans to downsize their personnel over the next two months.
In a survey by the Central Bank of Kenya of 1,000 CEOs in a range of industries, 25.7% of the participants hinted that they might fire some staff members in order to implement cost-cutting measures.
However, 637 respondents said that they would not be looking to hire any new employees between February and March.
Remarkably, just 106 of the 1,000 CEOs said they planned to increase the number of workers in their organization.
According to the report, the looming projection is that the job market has been occasioned by the increased costs of doing business which is also attributed to increased taxation.
Notably, employers have been among those affected by taxation policies included in the Finance Act 2023 which introduced additional costs for employers including the 1.5 per cent housing levy.
Additionally, rates were increased with another looming increase in deductions for the Social Health Insurance Fund (SHIF).
“High-interest rates, increased taxation, and the impact of a weaker Shilling are expected to keep input costs elevated, with global geopolitical tensions potentially affecting supply chains.
“Firms that reported possible difficulty in expanding their operations cited difficulties in securing finances for working capital. Other reasons cited included increased overhead costs, notably, the cost of electricity, fuel, labour and an increase in taxation which has worsened the cost of doing business,” read the report in part.
Already, private security companies have warned that they could lay off half of their staff should the government push with the Ksh35,000 minimum salary directive.
In a statement issued by the association of private security companies, it was highlighted that over 700,000 would be rendered redundant in the process.
Meanwhile, three national companies including Procter and Gamble, and Bayer are expected to exit the Kenyan market in the next two years, a move that will render over 1,000 employers jobless.