After a prolonged period of weak formal job creation, confidence is slowly returning to Kenya’s labour market. Chief executives across major sectors now expect to increase hiring, reflecting improving business conditions after years of caution. This shift follows one of the most difficult periods for employment since the Covid-19 pandemic, when firms focused on survival rather than expansion.
During the slowdown, companies froze wages, delayed recruitment, and avoided permanent hires. Many relied on temporary or informal labour to manage uncertainty. As demand weakened, firms prioritised retaining existing staff over adding new workers. This strategy helped stabilise operations but limited job growth, especially in the formal sector.
Recent improvements in business activity have begun to change this outlook. Executives increasingly view additional staffing as necessary to support recovering demand and sustain operations. While hiring plans remain cautious, the tone has shifted from defensive to forward-looking.
Improving Business Conditions Support Confidence
Private sector activity has strengthened across multiple industries, reflecting broader and more consistent growth. Manufacturing, agriculture, trade, construction, and services have all shown improved performance. This recovery has given firms greater visibility and planning confidence.
Surveys of senior managers show that many businesses now expect economic growth to strengthen slightly in the coming period. Stable inflation and a steadier exchange rate have reduced uncertainty, allowing firms to make longer-term decisions. This predictability plays a critical role in employment planning.
Banks appear the most optimistic employers. Stronger credit demand, selective expansion, and the need to replace exiting staff support their hiring expectations. Non-bank firms are more guarded, balancing growth opportunities against persistent cost pressures and uneven consumer demand.
Credit Access Shapes Hiring Decisions
Easing financial conditions have become a central driver of employment expectations. Lower lending rates improve cash flows and make borrowing more affordable. This supports working capital needs, asset financing, and postponed expansion projects.
Executives link stronger private sector credit directly to employment sustainability. Cheaper financing allows firms to reduce reliance on short-term labour and consider permanent roles. Improved access to credit also supports trade activity and inventory buildup, which strengthens demand for labour.
However, this optimism remains conditional. Firms remain sensitive to changes in taxation, government payments, and operating costs. Delays in settling pending bills continue to strain liquidity for suppliers and contractors, limiting their ability to hire despite improving demand.
Risks and Uneven Recovery Remain
Despite improving sentiment, hiring expectations vary widely across sectors. Agriculture, manufacturing, construction, tourism, and trade lead employment prospects due to expansion and diversification plans. Other sectors remain constrained by structural challenges.
Transport firms, in particular, express caution. High logistics costs, port congestion, lengthy clearance processes, and elevated freight charges continue to limit growth. These barriers reduce confidence and discourage new hiring despite broader economic improvement.
External risks also shape decisions. Global uncertainty, commodity price volatility, and geopolitical tensions remain key concerns. Domestically, fiscal consolidation and reduced government spending could weigh on demand if not carefully managed.
Even with these challenges, the overall direction has shifted. Firms now focus on measured expansion rather than pure cost containment. While the transition will remain gradual, the renewed willingness to hire signals a potential turning point for Kenya’s formal employment market.
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