A growing number of Kenyan businesses are considering reducing their workforce as high operating costs and weak consumer demand continue to put pressure on companies across several sectors.

A September 2026 survey by the Central Bank of Kenya (CBK) found that 12.9 per cent of chief executive officers expected their firms to reduce full-time employment between October and December 2026.

The survey covered 600 private-sector firms operating in sectors such as manufacturing, agriculture, tourism, retail, financial services and professional services.

While 12.2 per cent of CEOs expected their companies to increase employment, 74.8 per cent anticipated keeping their workforce at the same level.

The findings suggest that many businesses are prioritising cost management rather than expanding recruitment during the final quarter of the year.

High Operating Costs Put Pressure on Employers

According to the CBK, high business operating costs, rising energy prices and geopolitical tensions, particularly in the Middle East, remain major challenges facing companies.

Businesses have reported higher expenses for fuel, transportation, imported goods and other production inputs.

However, many firms have struggled to increase the prices of their products and services because of competition and consumers’ limited purchasing power.

This has created pressure on profit margins, forcing some companies to reconsider their spending and staffing plans.

The CBK also reported that some businesses reduced their workforce during the third quarter as they responded to rising costs and subdued demand.

Businesses Remain Cautious About Hiring

Despite the concerns over employment, most surveyed CEOs did not anticipate making major changes to their workforce during the fourth quarter.

The 74.8 per cent who expected employment levels to remain unchanged accounted for the largest share of respondents.

This suggests that many companies may continue operating with their existing teams rather than hiring additional workers or implementing widespread staff reductions.

For job seekers, the findings point to a potentially challenging recruitment environment as businesses balance their staffing needs against rising operating expenses.

Festive Season Offers Hope for Business Growth

Despite the pressure on employers, the CBK survey showed that businesses remained optimistic about increased economic activity during the final quarter of 2026.

Some companies expect festive-season spending, hotel bookings and social events to boost demand for their products and services.

The survey found that 55.9 per cent of respondents expected demand orders to increase. Meanwhile, 49.6 per cent anticipated higher production, and 55.2 per cent expected sales to rise.

However, stronger demand may not automatically translate into additional jobs, as many firms remain cautious about increasing their wage bills.

High Costs Remain a Major Concern

The survey highlights the difficult position facing Kenyan businesses: companies want to take advantage of new opportunities but must also manage expenses that threaten their profitability.

Rising energy and transport costs can affect businesses of different sizes, while weak consumer purchasing power makes it harder for firms to pass those expenses on to customers.

The outlook for employment will therefore depend partly on whether businesses can sustain sales growth while controlling their operating costs.

For now, the CBK findings suggest that most companies intend to maintain their current staffing levels, even as a portion prepare for possible workforce reductions in the final quarter of 2026.