CEOs have warned of tough times ahead, warning that mass layoffs and minimal hirings will be the order of the day in 2024.
In a survey conducted by the Central Bank of Kenya (CBK) covering 1,000 Chief Executive Officers in various sectors of the economy, it was noted that layoffs and minimal hirings would be occasioned by the current business environment highly affected by taxation policies.
According to the survey results, 352 CEOs out of the 1,000 projected that they will begin sending their employees home from January to April 2024.
On the other hand, only 66 CEOs indicated that they had plans to hire new people for their companies.
A photo of jobseekers waiting for an interview in Nairobi County on June, 18, 2019.
Nairobi County Government
The remaining 582 expect to retain their current workforce as is, a move that is detrimental to jobless Kenyans hunting for opportunities.
New taxes, such as the Housing Levy and the 16 per cent VAT fuel, which were included in the Finance Act 2023, have increased the cost of doing business as companies spend more in the payment of taxes.
Apart from taxation, the CEOs also expressed that the sales of products have also reduced in recent months, hence hampering the growth of the institutions, which contribute to the creation of job opportunities.
“Firms in the agriculture sector expect that high fuel prices could persist into the first quarter of 2024, hence continued high input costs. Consequently, firms are likely to scale back to keep overhead costs in check. Further, the enhanced El Niño rainfall could prevent the planting of crops that would ordinarily be harvested in the first quarter.
“Respondents expect that continued increases in fuel prices will keep production costs elevated, thereby continuing to exert pressure on sales prices. The attendant decline in sales, exacerbated by low consumer purchasing power, could impact employment numbers,” read the report in part.
The depreciation of the shilling and high inflation rate were also highlighted as factors that could affect the workforce come 2024.
Additionally, as a means of adapting to the tough business environment, companies are expected to diversify their businesses to look for more markets among Kenyans.
The CEOs also indicated that they will be seeking to digitise their operations and services, limiting the need for human services.
A photo of a phone user inserting a pin on their mobile phone during the registration of Hustler Fund on November 30, 2022.
Ministry of Cooperatives