Kenyan firms cut jobs at the fastest rate on record in April – Survey

Local firms retrenched staff at the fastest pace on record across April due to Covid-19 led disruptions to productivity, a new survey shows.

The new survey contained in the monthly published Purchasing Managers Index (PMI) by Stanbic Bank/IHS Markit shows employment in April this year was at its lowest since January 2014.

The findings spell doom to the country’s labour force landscape which already suffers from acute unemployment especially among the youth.

The fast pace of job cuts is largely attributable to falling output among domestic companies with productivity being dragged down by the Covid-19 pandemic.

According to index, April’s output reading stood at 34.8 a count barely shy of the historical bottom of 34.4 registered in October 2017.

“Covid-19 associated headwinds continued to weigh down private sector economic activity in April. According to most firms, the weakness in private sector activity is emanating from subdued domestic and external demand conditions, in addition to the curfew restrictions in place,” noted Stanbic Bank regional economist Jibran Qureishi.

Further, new orders, purchases and exports also set new lows during the month marking additional indicators to private sector productivity in the country.

Surveyed companies reported difficulties in obtaining inputs as business vendors suffered challenges arising from recent Covid-19 containment measures.

Moreover, staff costs hit a new low during the month as employers severed pay in response to weaker output and company shutdowns.

Qureishi expects April findings to lay down a marker on the expected deterioration of business conditions/employment creation in the country in coming months under the prolonged stay of the Covid-19 pandemic.

“Its safe to say that, at least with anecdotal evidence available so far, the epicentre of the Covid-19 impact on economic activity will be in the second quarter of this year. However, as we have said before, the longer the impact of this shock, the more acute the impact on economic output will be. Estimates on future economic growth are likely to be very dynamic.” he added

A recent report from the Ministry of Labour and Social Protection painted damning statistics indicating the loss of atleast 133,657 jobs since the first reported Covid-19 case in the country.

During the Labour Day celebrations on May 1, President Uhuru Kenyatta acknowledged the imminent job losses even as he insisted on the importance of the Covid-19 containment measures which have resulted in widespread economic disruptions.

According to President Kenyatta, the government is set to announce measures to re-open the economy even as the development remains subject to advice by health offcials.

“We could lose upwards of 500,000 jobs over the next six months. We must do whatever it takes to minimize if not full contain such loss in jobs. As government, we are working to flatten the corona curve but fundamentally I want us to work together to flatten and crush the curve of joblessness,” he said.

Official statistics on jobs at the end of the first quarter from the Kenya National Bureau of Statistics (KNBS) are expected at the end of month to further the picture on the pandemic’s initial impact.

Other jurisdiction have suffered a similar fate of job losses with data from the US Bureau of Labor Statistics for instance quoting unemployment insurance claims at 26.5 million individuals in five weeks since mid-March.

Latest statistics from the KNBS to December 31 placed the country’s unemployment rate at 6.5 percent from a better off count of 6.2 percent in March 2019.

Youth aged 20 to 24 years are the hardest hit by unemployment accounting for the cohort with both the highest rate of unemployment and the lowest rate labour utilisation.

Kenya’s entire labour force is tabulated at 19 million persons, with the employed accounting for an 18.1 million share, while the unemployed total 929,595.

Additionally, 8.1 million individuals in the working bracket are reported not to be economically engaged.