Most Private Sector Workers Go Without Pay Hikes as Job Losses Mount

The majority of employed Kenyans experienced no salary growth in May 2026, as employers maintained stable wage bills despite escalating living expenses and higher operational costs. According to the recent Stanbic Bank Kenya Purchasing Managers’ Index (PMI) published on Thursday, June 4, wage expenses experienced only minimal growth in May, with 99 percent of participating businesses indicating no alteration in their compensation expenditures compared to April. This finding implies that numerous employees did not receive salary increases during May, even as many Kenyans continue to face challenges from elevated living expenses and rising costs for essential products and services. The survey report highlighted this trend, reflecting the hesitation among numerous businesses to modify compensation packages despite difficult economic circumstances. Labor expenses throughout Kenya’s private sector economy experienced only slight increase again in May as the corresponding seasonally adjusted index stayed near the neutral benchmark of 50.0. Ninety-nine percent of survey respondents documented no variation in employee costs since April,’ the survey revealed. This follows a month after the Ministry of Labor sanctioned a 12 percent nationwide wage hike for Kenyan workers and a 15 percent salary boost for agricultural sector employees. In a notice dated May 7, 2026, Cabinet Secretary Alfred Mutua stated that the enhanced wage framework would assist employers in evaluating salaries and modifying payroll systems under their human resource protocols, resulting in updated payment documents. Concurrently, business conditions deteriorated significantly during the review period, with the headline PMI declining to 46.6 in May from 49.4 in April. A PMI reading below 50 indicates contraction in private sector operations. The deceleration was primarily linked to diminishing sales and reduced consumer expenditure as inflation constrained household and business financial resources. Simultaneously, new orders declined at the quickest rate since July 2025, with enterprises reporting that clients had grown increasingly reluctant to spend amid escalating prices and economic uncertainty. The unfavorable business climate also extended to the employment market, with private sector employers reducing workforce numbers for the first time in 16 months. ‘Reduced pressure on capacity through a decline in new orders led companies to downsize their personnel for the first time in 16 months,’ the report stated, adding that temporary workers experienced the most significant impact.