The banking sector has been grappling with reduced profit margins after amended laws capped the cost of loans.
Out of 40 banks, including the non-listed ones, only 11 grew their bottom line during the 12-month period ended December last year.
Some manufacturing and agricultural companies also cut back on the number of seasonal or casual employees when revenues dropped.
Companies listed on the Nairobi Securities Exchange (NSE) shed more than 4,250 jobs last year as a prolonged election stand-off saw most companies shrink their payrolls to protect their bottom lines.
Annual report data for 57 NSE-traded firms covering the 2017 financial year shows that 29 of them cut back their workforce last year as economic growth dropped to a five-year low.
Thirteen of the firms hired more people while 15 are yet to release their annual reports or did not indicate their staff count.
Listed commercial banks accounted for the bulk of job losses at 2,142, followed by ARM Cement #ticker:ARM and TransCentury, which together cut 1,068 jobs.
The banking sector has been grappling with reduced profit margins after amended laws capped the cost of loans.
Out of 40 banks, including the non-listed ones, only 11 grew their bottom line during the 12-month period ended December last year.
Against this performance, many of them have resorted to job cuts and branch closures.
Staff headcount for eight of the eleven listed banks reduced last year led by KCB, which spent Sh2 billion on trimming its workforce by 709 employees to 6,483, while Equity Group reduced its workforce by 519.
Others were Barclays Kenya (323), Standard Chartered Bank (285), Housing Finance (76), Co-operative Bank (58) and Diamond Trust Bank (44).
The ability of an economy to create new jobs is one of the major indicators of its health, given that companies tend to hire only when assured of continued good performance and a stable operating environment.
The economy grew by 5.7 per cent in the first quarter of the year, compared with 4.5 per cent over the same period last year. In 2017, overall growth stood at 4.9 per cent, which was the lowest in five years.
In their latest Purchasing Managers Index for July, Stanbic and IHS Markit said that job creation among the firms polled had slowed to an eight-month low, indicating that the green shoots of economic recovery seen this year are yet to translate into payroll growth.
“Reflecting sustained periods of expansion in output and new orders, Kenyan firms were encouraged to raise staffing levels during July.
Marginal growth
That said, job creation slowed to a marginal pace,” said the two firms in the report.
Some manufacturing and agricultural companies also cut back on the number of seasonal or casual employees when revenues dropped.
Eaagads Ltd, Kapchorua Tea Kenya, Limuru Tea and Williamson Tea and Sasini all posted losses last year as a result of the drought. Kakuzi, Sasini and Limuru Tea together shed 269 jobs.
The 13 firms that recorded an increase in staff numbers last year added 1,283 people, led by Safaricom which grew its workforce by 696 to 6,130 employees in the year to March 2018.
Kenya Power added 162 jobs, with no other company adding more than 100 jobs during the year.
Prospects for new jobs are now heavily dependent on recovery of earnings of the companies, which last year were badly hit by the tense political environment and drought, with 40 listed firms reporting reduced bottom lines.
A record 18 companies, translating to about a third of NSE firms, returned losses to its shareholders while 22 companies saw a drop in profits.
The data from the annual reports shows, however, that the overall cost in salaries and wages rose for the listed firms in spite of the job cuts, although this was majorly driven by huge increases in Kenya Power and Safaricom labour costs.
The 51 firms which have published their salary data for 2017 reported a collective increase in payroll cost by Sh1.6 billion to Sh137.2 billion.
The power utility firm saw its employee wages rise by Sh2.2 billion to Sh14.9 billion in the year to June 2017, at a time when the company was rolling out its plan to expand the number of Kenyans connected to the national grid.
Safaricom’s#ticker:SCOM payroll increased by Sh956 million to Sh9.2 billion, though this was in line with a 14.3 per cent growth in net profit to Sh55.3 billion in the year ended March 2018.
Wages also grow when companies look to compete for specialised or limited talent, with companies such as Kenya Power and Safaricom that tend to have a large number of engineering staff more likely to pay more for top talent.