Banks are bracing for a hiring spree in the last quarter of 2024 and into the next year, a stark contrast to the struggles non-bank firms face in retaining employees, according to the latest Central Bank of Kenya (CBK) Market Perceptions Survey for September 2024.
Released on Saturday, October 12, the report highlights a challenging employment landscape, with many Kenyans likely to face job scarcity in the coming year.
The survey reveals that 76 per cent of banks plan to increase their workforce next year. This optimism stems from ongoing branch expansions, the introduction of new products, and the need to replace departing staff. In contrast, just 38 per cent of non-bank respondents anticipate hiring more employees, reflecting a bleak outlook shaped by high operational costs and a tightening market.
Non-bank firms are grappling with a multitude of challenges, including soaring production costs, low profit margins, and reduced income. The survey underscores that these financial pressures will significantly hinder their ability to recruit, prompting many to consider downsizing rather than expanding. Of particular concern is the 25 per cent of non-bank companies that have already laid off permanent staff this year, compared to only 4 per cent of banks.
As the economic landscape shifts, respondents from various sectors expressed concerns about future growth. While there remains a general expectation for resilience in the Kenyan economy, especially driven by improved agricultural output and a stable macroeconomic environment, the anticipated growth rate has been downgraded. The CBK on Wednesday, October 9, revised its 2024 growth projection from 5.4 per cent to 5.1 per cent, reflecting the broader economic slowdown affecting key sectors.
Despite these challenges, a glimmer of hope remains. The survey indicates that 71 per cent of respondents expect moderate to strong economic activity over the next three months, largely driven by increased demand, consumer spending related to the holiday season, and a boost in agricultural activities coinciding with the onset of the short rains.
Inflation, too, poses a dual narrative. Approximately 82 per cent of survey participants anticipate a decrease in inflation rates, attributed to moderating domestic fuel prices and a robust shilling. However, 41 per cent of respondents remain apprehensive about rising prices for food and beverages, indicating a fragile balance in consumer confidence and purchasing power.
The disparities between banks and non-banks extend beyond hiring practices. While banks have retained their casual employee numbers, non-bank firms have significantly reduced theirs. This trend paints a troubling picture for the non-bank sector, suggesting that the challenges they face are not merely temporary setbacks but potentially indicative of a more systemic issue.
Respondents remain cautiously optimistic about the economic outlook, with 58 per cent expecting a stable Shilling to bolster capital investments. This sentiment is further buoyed by anticipated monetary easing, which could help stimulate private sector credit and, subsequently, business activities.
However, looming risks such as reduced aggregate demand due to government austerity measures and stagnant incomes could impede growth. With the public increasingly dissatisfied with rising living costs and new taxation under President William Ruto's administration, the pressure for job creation remains intense.
