Kenyan firms freeze new hiring, suspend pay rise

Institute of Human Resource Management (IHRM) CEO Dorcas Wainaina. The job market survey found that 73 per cent of employers across 12 sectors have stopped new hiring. FILE PHOTO | NMG
Institute of Human Resource Management (IHRM) CEO Dorcas Wainaina. The job market survey found that 73 per cent of employers across 12 sectors have stopped new hiring. FILE PHOTO | NMG 

Flat or declining sales coupled with growing concern over the August 8 General Election have left dark clouds hanging over the labour market, forcing the majority of employers to freeze plans to hire or raise workers’ salaries, a newly-released report says.

The job market survey, conducted by Corporate Staffing Services using data from the Institute of Human Resource Management (IHRM), found that 73 per cent of employers across 12 sectors have stopped new hiring.

More than 57 per cent of the firms also indicated that they will not increase employees’ pay this year while the remaining 43 per cent will marginally adjust salaries to compensate for inflation.

Last week, the Treasury said the economy is likely to expand by six per cent this year down from an initial forecast of 6.5 per cent, pointing to a slowdown in private-sector credit growth.

The study found that reduced private sector credit uptake and the freeze in expansion plans by investors awaiting the outcome of the August elections had slowed down the creation of new jobs.


“The subdued political climate in an election year, coupled with a slowdown in economic growth remains the biggest concerns for the majority of organisations at 95.2 per cent,” says the study.

Lending to business and individuals grew a paltry 4.3 per cent in the year to December 2016, down from 20.6 per cent a year earlier, making it the slowest credit growth in more than 10 years.

The credit squeeze means less money supply in the economy as well as sluggish demand for goods and services.

The Kenya Bankers Association blames the squeeze on interest rate controls that took effect last September and has seen banks shun private borrowers perceived to be risky.

The CBK considers credit growth of between 12 and 15 per cent ideal for purposes of stimulating economic growth.

Consumer prices rose by 9.04 per cent, the highest inflation rate since June 2012 owing to a sharp rise in food prices caused by drought, according to the Kenya National Bureau of Statistics.

The survey found sales and marketing would create the most jobs in 2017 (30.1 per cent) followed by ICT (23 per cent), which will enable companies to leverage on technology as well as administration and accounting jobs that are expected to account for 22 per cent and 21.1 per cent of new jobs respectively. Technical skills will account for 19.4 per cent of total new jobs.

The survey found that most firms (49 per cent) are grappling with provision of competitive compensation followed by lifting employee morale at 42 per cent and retaining top talent at 39 per cent. At least 14 per cent of those surveyed are considering cutting costs.

“Only 24 per cent of employers interviewed were optimistic that more jobs would be created in 2017, while 22 per cent anticipate job cuts in the next few months,” said CSS chief executive Perminus Wainaina.

Only 30 per cent of employers were found to be somewhat positive about the job market while 24 per cent were outright unsure.

IHRM’s Executive Director Dorcas Wainaina said universities and tertiary technical institutions could play a major role in enhancing employability of graduates, arguing that thousands of young people in the job market lacked necessary skills.

The survey found that 67 per cent of job hunters applied for jobs they were not qualified for thereby overwhelming recruitment committees with thousands of applications while 57 per cent of qualified candidates hardly understood the scope of the jobs they applied for.

“Some 40 per cent accepted job offers, but used the acceptance letters to bargain for better terms at their current jobs. This has made it difficult for HR practitioners to choose the most deserving and most qualified candidates for jobs advertised,” said Ms Wainaina.

Sectors surveyed included banks, insurance companies, saccos, manufacturing, health care, media, non-governmental organisations, education, consultancy, public service, parastatals, professional service providers among them, lawyers, engineers as well as doctors and employers in the hospitality industry.