About 17.6 percent of employees in top firms are casual workers, as firms increasingly turn to contract staff to control costs.
Official statistics from the Kenya National Bureau of Statistics (KNBS) show that individuals engaged in casual employment grew from 416,900 in 2020 to 582,900 in 2025, accounting for 17.6 percent of the 3.32 million formal sector workers.
This comes at a time when Kenya’s soft economy has made firms reluctant to step up hiring and increase wages to cover inflation.
The trend of firms slowing down on permanent hires has seen the share of casual workers in formal office and factory jobs rise gradually from 15.2 percent in 2020 to 17.6 percent last year.
A casual worker, according to the Employment Act, 2007, is an individual whose terms of engagement involve payment at the end of the day and who is not engaged for a period beyond 24 hours at a particular time.
Hired on short-term contracts, casual workers fill production quota gaps by working long hours for low wages, often without pensions, health insurance or access to loan facilities, lowering labour costs for employers.
Pension and housing levies have recently emerged as key drivers of operational costs following additional obligations on workers for the two items.
The Affordable Housing Act requires employers in the formal and informal sectors to deduct 1.5 percent of gross monthly pay from workers and match the contributions towards the housing levy.
Contributions to the National Social Security Fund (NSSF) have also increased from as low as Sh200 to up to Sh6,480 under the latest updated rates.
Starting February 2026, NSSF contributions entered the fourth phase of adjustment, raising the Tier I lower limit from Sh8,000 to Sh9,000 and the Tier II upper limit from Sh72,000 to Sh108,000.
The contribution rate remains at 6 percent for both employers and employees, raising the maximum employee contribution from Sh4,320 to Sh6,480 per month.
KNBS data shows that salary rises in 2025 surpassed inflation for the first time in six years, despite employers offering workers smaller pay increases.
Inflation-adjusted earnings, or real wages – a barometer for measuring employees’ purchasing power – grew by 2.0 percent last year, marking the first time since 2020 that growth in workers’ earnings has surpassed the increase in consumer prices.
Consequently, a regularly paid worker, or wage employee, saw their monthly real earnings increase marginally to Sh56,566 last year from Sh55,450 in 2024.
The earnings are, however, still lower than in 2020, when they stood at Sh62,256, meaning workers’ earnings have suffered an erosion of Sh5,690 compared with six years ago.
Workers’ real wages had fallen for five consecutive years, including a negative 0.3 percent in 2024.
The positive real wage growth came in a year when economic growth slowed to 4.6 percent, little changed from 4.7 percent in 2024, pulled down by reduced activity in the agriculture sector.
Public employees, however, continued to bear the brunt of the high cost of living, with their real wages falling further to Sh50,041 last year from Sh51,191.67 in 2024.
President William Ruto’s government has cited stable inflation and exchange rates as some of its key achievements, noting that they have laid a sound macroeconomic foundation for growth.
The World Bank has downgraded Kenya’s growth forecast to 4.4 percent from 4.9 percent for 2026, weakening the economy’s ability to generate jobs and pay higher salaries, even as inflation is expected to erode workers’ earnings.