Job cuts ease out as firms resume full operations

Jobseekers in Nairobi during a past call for applications. FILE PHOTO | NMG

By CONSTANT MUNDA
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Summary

• Job sheds by corporates flattened out in September as more firms resumed operations after months of interruptions caused by restrictions imposed to stem the spread of Covid-19.
• The pause in layoffs came as the Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) jumped to 56.3 in September, from 53.0 in August, its highest level since April 2018.

Job sheds by corporates flattened out in September as more firms resumed operations after months of interruptions caused by restrictions imposed to stem the spread of Covid-19, a survey shows.

The pause in layoffs came as the Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) jumped to 56.3 in September, from 53.0 in August, its highest level since April 2018—raising hope of recovery after prolonged economic turmoil since March when Kenya reported its first case coronavirus infection.

The 50.0 mark separates growth from contraction, according to the key index which is based on feedback from corporate managers in key sectors such as manufacturing, services and agriculture

“Rising demand led to a solid uptick in backlogs of work during September, which led some firms to hire new workers,” the survey report by Stanbic Bank and UK’s Markit said.

“This counteracted job cuts at other firms, amid efforts to reduce expenses. As such, employment was broadly level during the month, following a six-month run of decline.”

Demand, however, started edging up in July with removal of inter-county travel restrictions and resumption of domestic flights in July, followed by restart of international commercial passenger flights from August 1.

Mass-gathering restrictions have this month also been eased to 200 persons from 100 before, while bars have been re-opened for the first time since March with curfew hours now shortened to 11pm-4am, offering further lift to corporate sales.

"The PMI indicated a further improvement in business confidence and operating conditions this month, thanks in large part to the lifting of some domestic Covid-19 containment measures,” Stanbic Bank head of Africa research Jibran Qureishi wrote in the monthly the PMI report.

“This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave globally that could dampen external demand again.”

The outlook for further growth in jobs remained gloomy, with future expectations falling to lowest levels since February 2014.

Firms had since March largely resorted to laying off workers, slashing salaries and adopting un-paid leave policies to cut operating costs amid depressed demand which started before the global coronavirus pandemic struck.

September was the third month in a row that the PMI reading edged above the 50 mark that separates growth from contraction in business deals.

Data by the Kenya National Bureau of Statistics(KNBS) showed that about 1.72 million workers lost jobs in three months to June when Kenya imposed coronavirus-induced lockdown that led to layoffs and pay cuts.

The latest Quarterly Labour Force Survey said that number of people in employment fell to 15.87 million between April and end of June compared to 17.59 million the previous quarter with young people being the hardest hit by job cuts compared to their counterparts aged above 35 years .