Why CEOs plan to fire 370,000 employees

More CEOs plan to trim their workforce this year.

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More chief executives (CEOs) plan to trim their workforce this year, a new survey by the Central Bank of Kenya (CBK) shows, citing declining business performance and cost-cutting.

The survey shows that in just five months, company executives (in the non-banking sector) have raised the number of jobs they plan to cut this year by more than 60,000.

This is after the CEOs and senior staff of 215 companies, in a survey conducted by the CBK last month, indicated that the number of employees they “definitely won’t” retain in 2024 is 18 percent of the employees they had last year.

This is a rise from the planned layoffs of 15 percent of the employees the companies employed last year, as indicated in a similar survey conducted in January.

“Non-bank respondents, on the other hand, expressed the need to cut costs and improve efficiency as reasons for not hiring in 2024. Some, however, expressed concern about industry decline as a result of the challenging business environment,” the CBK survey stated.

Non-bank private firms employed 2,073,600 persons last year, according to the 2024 Economic Survey.

To cut 18 percent would translate to 373,248 jobs that company executives said would be shed this year, an increase from 311,040 jobs (15 percent of the 2023 jobs), as per the January survey.

The number of jobs company executives in the non-bank sector are sure to retain this year has remained at a constant seven percent of jobs they had last year, while those they are sure won’t be retained has risen from 15 percent to 18 percent.

The growth in the number of employees non-bank companies express they “definitely won’t” retain in 2024 has been marked amid growing concerns of industry decline, high operating costs, technological advancements

The company executives also cited the need to reduce overheads, improve efficiencies, attract new talent, and expand businesses as other top reasons for their employment expectations for 2024.

The survey sought to find out from CEOs and other senior staff of 263 banks, micro-finance banks, and non-bank firms “about their expectations on the number of employees they expected to retain in 2024 compared with 2023.”

“The survey showed lower hiring expectations for 2024 by bank and non-bank private firms,” the CBK notes.

The survey, however, notes that banks have laid down strategies to hire additional staff this year, mainly to replace exiting staff, expand business, and attract new talent.

Bank executives reduced the number of staff they indicate they “definitely won’t” retain in 2024, from 6 percent to 3 percent of staff they had last year.

“Banks expected to hire in 2024 largely to grow business and expand, to attract new talent, and to replace exiting staff,” the CBK stated.

The financial and insurance activities sector, where banks fall, employed 71,900 persons in 2023, according to the Economic Survey, 2024.

The Central Bank sent out questionnaires to 354 executives of banks, micro-finance banks, and non-banks, including 84 hotels, out of whom a total of 263 executives responded.

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Note: The results are not exact but very close to the actual.