Kenya’s private employment sector turns to temporary/ contractual terms; Report
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The private sector employed more Kenyans despite the tough economy but on a temporary basis according to a new report
The private sector employed more Kenyans despite the tough economy but on a temporary basis according to a new report.
The private sector saw its first monthly upturn since August of last year in January, with a small increase in business activities.
Kenya’s Purchasing Managers Index showed a little increase in the pace of job creation, which was attributed to hiring more staff.
Nevertheless, it was reported that more private businesses were turning away from providing long-term contracts to workers who filled positions made available by the backlog of work.
The PMI gauges the state of the economy across a number of industries, including retail, services, manufacturing, mining, and agriculture.
According to the report, Kenya’s PMI increased marginally to 49.8 in January compared to 48.8 in December 2023, 0.2 off the target. This slight growth was attributed to improvements in the agriculture, construction, and service industries.
However, the manufacturing, wholesale, and retail sectors recorded decreases, with firms remaining under pressure from insufficient cash flow.
“Sector performances were split with falls in manufacturing and wholesale and retail offsetting expansions in agriculture, construction, and services,” the report read in part.
“The almost-stable trend was linked to a similar picture for new order volumes, which decreased at only a fractional pace. Weak client demand and cash flow problems continued to hit sales at many companies, whereas others noted improvements in order books and foreign sales.”
In contrast, the purchasing activity dropped for the fifth month in a row and at a faster pace than in December last year.
“Subsequently, inventories of inputs were largely unchanged after three successive months of growth. Lower buying meant that suppliers were able to deliver items more quickly, although the rate of improvement was only modest,” the report stated.
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Christopher Legilisho, Economist at Standard Bank, noted that demand for exports from the UK and Germany increased in January due to the depreciation of the Kenyan currency which trades at Ksh160 against the green buck.
“Furthermore, Kenyan businesses reported stable inventories, with slower price increases in January. Price pressures have eased; input price inflation is now at its lowest level in over a year.
However, surveyed firms still face pressure from both high import costs and taxation. Moreover, survey results indicate that business confidence for the year ahead is still subdued,” Legilisho stated in the report.
Since taking office, President William Ruto has been hellbent on tapping into the digital space to create jobs for unemployed youth in the country.
The latest data from the Kenya National Bureau of Statistics (KNBS), showed that the unemployment rate dropped to 960,001 in 2022 as compared to 1,055,8 16 in 2021. From the data, youth aged 20-24 had the highest unemployment rate of 16.8 percent.
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