Fragile Job Recovery in Kenya's Uneven Labor Market

In 2025, the labor market demonstrated strength as increasing consumer demand boosted private-sector activities, allowing businesses to maintain current positions and hire extra personnel, albeit primarily on temporary agreements. However, increased recruitment via temporary and informal contracts in corporations throughout Kenya provided employees minimal job stability or potential for better earnings, as salary increases stayed mostly low for most of the year. Businesses added more people for much of the year because of improved sales figures and enhanced business assurance, based on the monthly Stanbic Bank Kenya Purchasing Managers Index (PMI), which collects insights from approximately 400 company executives. The rate of hiring intensified towards the end of the year, following a reversal in production and fresh orders after a mid-year dip caused by anti-government demonstrations, decreased consumer expenditure, and strict financial situations. Read: Employment recovers as private sector activity reaches its peak since the pandemic. From May until August, organizations experienced falling revenue, fewer incoming orders, and lessened operational activity amidst expensive products, insufficient client funds, and disturbances linked to political instability. Nevertheless, employment maintained relative robustness during this period, as numerous enterprises chose to keep staff expecting future improvements, although backlog numbers declined. According to PMI reports, employment grew continuously for ten months ending in November, with job generation in the last quarter being some of the swiftest observed in over two years. Data implies that most firms decided to expand their workforces using part-time workers, mirroring a previous tendency early in the year when companies employed casual staff to manage growing demands without entering long-term commitments. For example, in April and May, PMI research indicated hiring focused mainly in service industries, wholesaling, retails, and building works, predominantly utilizing short-term arrangements. Although manufacturing started slowly in the initial three-months, it caught up later in the year once demand returned and stockpiles replenished. “Employment levels climbed rapidly this year owing to improved economic circumstances,” remarked Christopher Legilisho, an economist at Standard Bank, referring to the November PMI statistics. Even though demand became stronger toward the latter portion of the year, majority of companies refrained from making full-time appointments; around 97-99% of these entities declared no changes in salaries every month. This didn’t assist Kenyan workers, whose average experience included negative income adjustments over the past five years, revealed by evaluation of yearly economic questionnaires conducted by the Kenya National Bureau of Statistics. Real incomes, adjusted for price fluctuations, kept decreasing after showing a decrease of 0.3 % previously, as bosses still hesitant to provide larger increments to handle escalating running expenses. A survey carried out by the World Bank Group alongside the state-backed Competition Authority of Kenya highlighted that the practice of employing temporary help represents underlying, longstanding systemic issues inside Kenya's economy. Operational problems like high energy and transportation charges, along with inadequate rivalry in crucial areas persistently hinder firms' willingness to grow their scale and commit to official roles. Formalizing Positions Reluctance to establish formal jobs isn't something novel in Kenya, where employers tend to take cautious approaches regarding employee choices, usually referencing diminishing pending tasks. Kenya’s percentage of officially recognized occupations dropped from 18.5 percent in 2010 to 15.5 percent in 2024, according to a collaborative investigation done by the World Bank and CAK. Although the proportion of stable posts fell, the nation's total national product (GDP)—a gauge measuring overall economic actions performed by authorities, corporates, and citizens—grew annually by over five percent and produced several hundred thousand vacancies each year. As an illustration, almost nine-out-of-ten of the 782,000 spots made available in 2024 were unregulated, a development identified partially due to scarce competition combined with costly inputs restricting enterprise progress. “When there exists fair competition, prices reduce, giving Kenyans greater purchasing power," mentioned Ryan Kuo, the World Bank's specialist focusing on banking, competitiveness, and capital investment. "This leads to heightened consumption of items and services resulting in more opportunities in the broader marketplace." Mr. Kuo emphasized that augmented competition enhances effectiveness, letting establishments produce significantly more worth per worker thus offering superior compensation packages. Kenya presents exceptionally high net profit margins contrasted against developed nations known for strong opposition - indicating probable monopolistic tendencies wherein prominent organisations might impose excessive fees thanks to lack of competitive challenge. Dominant Organisations The recent publication titled 'Kenya Economic Update', issued on November 24th, 2025 highlights persistent control over certain commercial segments including electrical supply, telecommunication networks, and fertilizer delivery systems causing escalated expenditures, suppressed funding initiatives, and limiting extension possibilities for typical providers generating regular occupation slots. It pinpoints Safaricom concerning telecom technology and Kenya Power related to electric utility provision as powerful operators functioning under negligible rival constraints. According to the institution, Kenya Power's monopoly-like status enables considerable impact upon tariff structures and dependability standards hence contributing to premium costs, restricted options, and sluggish advancement in performance metrics. Such elements notably affect industrial units commonly regarded as vital contributors to extensive legitimate job creations. Manufacturers frequently point out exorbitant electricity bills as main hindrance preventing them from extending processes, financing brand-new facilities, and enlarging payroll sizes. Similarly, the global organization states that Safaricom's supremacy in electronic payment solutions and information transfer influences charge models and accessibility parameters posing difficulties for emerging tech startups. Report details show that Safaricom offers pricier internet plans comparing both local rivals plus counterparts located nearby countries namely Gambia, Nigera, Ruanda, & Zambie. Additional Imbalances World Bank additionally points attention to anomalies present within farming industry specifically involving Government-subsidized nitrogenous compound aid program dependent on compact conveyance system managed exclusively by top distributors Yara and ETG. Insufficient contest within subsidized resource channels reduces presence of highly demanded nutrient combinations triggering geographical imbalances thereby excluding independent participants stifling agrarian efficacy together with slowdown in formation of genuine occupational openings spanning food processing, shipment, and trade sectors. Within transit domain, unclear rules governing entrance of newcomers in specialized fields like aviation cargo management, divided regulations, and obstacles impeding entry into commerce elevate shipping costs compressing profits for makers/exporters encouraging reduction in involvement relating to human-centric ventures. "These irregularities contribute directly to Kenya's dwindling ratio of actual working places", expressed the Global Organization associating constrained rivalry with inflated procurement expense, lower investment intensity, and restrained organizational progression. Structural burdens somewhat clarify reason behind steady stagnancy in earning augmentation parallelled by increase in outputs and recruiting trends documented via PMI records. Staff remuneration slightly increased till middle parts of 2025, followed briefly upward movement in June attributed to extended hours worked, then again surge occurred in August corresponding to living standard considerations. By late November, wage escalation reached lowest speed recorded so far in calendar year. Year-end PMI facts reveal enterprises react positively to amplified revenues by engaging more hands yet world organisation discoveries imply absence deep-rooted reformations could obstruct continuation of improvement in compensatory escalations and lasting resurgence of appropriate position placements. → cmunda@ke.nationmedia.com Join our WhatsApp platform for updated news covering trading environment developments. Supplied by SyndiGate Media Inc. ( Syndigate.info ).