Construction of the Standard Gauge Railway terminal near Port Reitz in Mombasa. The rail project is a key employment generator. PHOTO | SALATON NJAU
What you need to know:
The 2015 upturn in jobs creation hands President Uhuru Kenyatta and his Jubilee administration some reason to make their case on one of the most critical economic issues ahead of next year’s General Election.
The survey also found that the total take-home pay of those in employment stood at Sh1.4 trillion, translating to an average annual pay of Sh604,255 before adjusting for inflation that averaged at 6.6 per cent.
Increased activity in the agriculture, manufacturing and trade sectors powered Kenya’s labour market to a rebound that created 128,000 formal sector jobs, according to official figures released Tuesday.
The 2015 performance, which was made public through the 2016 edition of the annual economic survey, shows that the pace of economic activity slightly intensified to 5.6 per cent from 5.3 per cent the previous year, but that was enough to trigger job market growth.
“The largest contributors to wage employment in the private sector were agriculture, forestry and fishing, manufacturing, wholesale and retail trade, repair of motor vehicles and motorcycles and education,” the Kenya National Bureau of Statistics (KNBS) said in the Economic Survey 2016.
The 128,000 new formal sector jobs accounted for 15.2 per cent of total jobs generated last year, helping to pull back a bourgeoning unemployment crisis that has dogged East Africa’s largest economy in the past five years.
The 2015 upturn in jobs creation hands President Uhuru Kenyatta and his Jubilee administration some reason to make their case on one of the most critical economic issues ahead of next year’s General Election.
The 2015 jobs growth means that the economy created about 20,000 more formal sector jobs growth than it did the previous year when the number stood at 106,300. Private companies accounted for 71 per cent or 90,880 of the total new formal sector jobs — including self-employment.
The rebound in formal sector jobs growth came as a big relief to the government and analysts said the pace could get better with increased investment in economic enablers like infrastructure and a coordinated effort to curb corruption which is wasting resources and making it difficult for businesses to flourish.
“This boils down to basics such as establishment of a sound macroeconomic climate with reasonable interest rates, infrastructure, security and investor-friendly policies, all of which will trigger business activity,” said Bitange Ndemo, an associate professor at the University of Nairobi’s Business School.
Dr Ndemo said there is also need to mechanise agriculture, the economy’s mainstay, and invest in value addition to create better economic linkages that spur jobs growth.
A key outcome of the survey is that the Kenyan economy’s recent signs of transformation in favour of the modern sectors such as technology and manufacturing reversed, keeping traditional agriculture sector as the economic mainstay.
Agriculture now accounts for 30 per cent of the gross domestic product (GDP), and employs nearly 70 per cent of the population.
The sector accounted for about 22 per cent of GDP in 2010 but expanded steadily to 27 per cent in 2014 before hitting the new high of 30 per cent last year.
Dr Ndemo said Kenya’s potential to create more informal sector jobs lies untapped, arguing that policy actions aimed at removing the many obstacles such as flexible terms of business registration for informal traders and better access to loans would increase the pace of employment creation.
One million jobs a year
The informal sector created 713,600 new jobs last year, accounting for 84.7 per cent of the 841,600 total jobs created or about 150,000 jobs less than the one million jobs a year that the Jubilee government promised on coming to power.
The increase in formal jobs came despite the government’s decision to cut back its hiring of new staff as part of the measures to curb a ballooning public wage bill. The total number of people working for government and related agencies stood at 718,400 last year.
Overall, 15.1 million Kenyans had jobs in both public and private sectors in 2015 compared to 14.3 million a year earlier. This means that about 10 million remain unemployed, with 25.5 million people in the working age bracket.
The survey also found that the total take-home pay of those in employment stood at Sh1.4 trillion, translating to an average annual pay of Sh604,255 before adjusting for inflation that averaged at 6.6 per cent.
Kenya’s ability to create new jobs has lagged behind population growth, resulting in a narrowing of employment opportunities, especially for entry-level workers fresh from college.
A World Bank report released in March said Kenya has the largest number of unemployed youth in the region, with nearly one in every five youths of working age having no job.
Official data shows that that public sector salaries are still higher at an average of Sh52,200 per month compared to the private sector wages that stood at an average of Sh49,600.
The survey found that private sector wages grew 10.7 per cent last year compared to 6.2 per cent for civil servants but that fell short of closing the gap.
The government employed additional 16,300 people in the education sector, 1,600 in human health, and 1,600 in electricity and gas industries.
Employment in public administration and defence, compulsory social security activities declined 2.2 per cent compared to an increase of two per cent in 2014, the report says.
Construction kept its position as the most robust sector of the economy, growing 13.6 per cent followed by financial services sector (8.7 per cent) and agriculture (5.6 per cent).
The World Bank has said that aside from the government providing a conducive business climate for private companies to thrive and create jobs, Kenya must funnel more resources into developing its human capital to boost productivity.
It says that mass unemployment continues to deny Kenya the opportunity to put its growing labour force to productive use, thereby “denying the economy the demographic dividend from majority young population”.
