Kenyan private sector firms cut employee salaries further
Kenyan private sector firms have continued to trim employee salaries further as the demand for goods and services staggers.
This is according to a new private sector economy survey by Stanbic Bank which shows the sharpest decline in staff costs across February and for the fourth consecutive month.
Companies continue to trim the wages as part of cost containment measures occasioned by tightening financing conditions and reduced customer demand.
According to the Stanbic Bank Purchasing Managers Index (PMI), business conditions continued to improve across February but the rate of expansion slacked to its slowest in eight months.
The headline index dropped to 50.9 points from 53.2 points in January.
“Slower sales growth was often related by panelists to a lack of cash flow in some parts of the economy, leading to reduced customer spending and travel. New orders from foreign clients grew only modestly, and to the least extent since last June,” the survey notes.
The continued wage reduction compensated for higher firm purchase prices triggered by the revision to a higher rate of VAT at 16 per cent in January with companies containing the overall growth in input prices.
Nevertheless, job numbers continued to tick upwards during the month even as job creation eased for the first time across three months.
Moreover, firms reduced their stock of purchases to their lowest since July 2020 on the account of weakening customer demand.
During the month, firms lifted output prices for the second time after January in a move to retain shaky profit margins.
Subsequent to slowing output levels, first expectations for growth in the next 12 months has fallen slightly from January but has remained stronger that levels recorded in the second half of 2020.