Opinion & Analysis

EDITORIAL: Tweak policies to feed job creation in private sector

Workers follow proceedings during a recent Cotu meeting. file photo | nmg
Workers follow proceedings during a recent Cotu meeting. file photo | nmg 

The Jubilee administration’s pledge to create one million jobs every year could have seen up to five million Kenyans join the employment ranks by the end of this year.

The ruling coalition has, however, fallen short of this target in the past four years.

The ‘Economic Survey 2017’ shows that job creation dropped 1.03 per cent last year, from the annual peak of 841,600 positions generated in 2015.

What this means then is that the 5.8 per cent headline economic growth rate could have been largely driven by capital consumption, specifically for construction of the Standard Gauge Railway (SGR), rather than labour intensive production.

Out of the 832,900 jobs generated last year, only about 85,600 were formal while the rest were in the informal sector. Some informal jobs are in fact very well paying, but the majority are temporary and offer very low remuneration.

The Survey data also indicate that growth of private sector wages fell below the inflation rate, while public sector pay increase just about matched the rise in prices of goods and services.

As has been the case over the years, the Kenya National Bureau of Statistics does not publish the official unemployment data. 

But the statistics released on Wednesday should be cause for great concern to policymakers, especially coming against the backdrop of massive retrenchment in the financial sector and a sharp decline in growth of credit.

It is a clear indicator that Gross Domestic Product growth is not translating into increased economic opportunities for the citizens.

Completion of the first phase of the SGR mid this year should hopefully put more youths into employment, and perhaps stir up other sectors.
But more should be done to put youths in employment.

The country’s expenditure on infrastructure is still below the internationally recommended standards, as public sector salaries and allowances continue to gobble up half of the annual tax revenue.

The government should adopt more business-friendly policies to enable growth of private sector, the most effective job creation tool.