Service sector key to youth jobs creation

Kenya’s labour market is shaped by service sectors such as wholesale and retail, food and accommodation, finance, education and transport.

This is according to the ‘Job Entry-Level Skills: Seizing the Moment, Securing the Future’ report by Aga Khan University’s East Africa Institute (EAI). The service sector accounts for 84 percent of created jobs, with the wholesale and retail sector accounting for 32 percent of entry-level jobs held by the youth.

This, in turn, means that a majority of youth aged 18-30 find employment or related opportunities in this sector. Despite the hype on manufacturing and innovation, Kenya has simply, and unfortunately become a warehouse economy. The working population responds to trends in the labour market by importing and distributing goods and services from countries whose manufacturing prowess goes beyond mere rhetoric or static blueprint.

Let’s take a look at a few global statistics. According to the US National Retail Federation, retail sales in America hit a record of nearly $4 trillion in 2018, creating 4.8 million jobs. In the UK, 2.8 million entry-level positions were filled due to the retail sector’s economic output of $115 billion in 2017.

According to the Kenya National Bureau of Statistics, wholesale and retail trade is the fifth-largest contributor to the gross domestic product (GDP) and the third-largest contributor to private sector employment. In 2016, the sector employed 238,500 Kenyans and accounted for 8.4 percent of the GDP.

Logically then, investing in the wholesale and retail sector should be a viable option for youth employment if the right measures are put in place and should be prioritised by the government just like the Big Four agenda. A scoping study done by UK Aid in 2016 focusing on the features, challenges and opportunities in manufacturing, portrays Kenya as going through a de-industrialisation period. It highlights a lack of skills, management, infrastructure, macro policy, political economy and poor investment climate as hindrances to job creation.

On the other hand, while agriculture is the highest contributor to Kenya’s GDP, it accounts for only three percent of jobs occupied by youth according to the EAI report. So what are employers looking for in terms of skills and competencies? The report findings showed that employers are looking for entrepreneurship, life skills, socio-emotional skills and core values. Marketing, sales and financial management were top skills in demand, especially for the service sectors.

Therefore, technical vocational education training (TVET) and higher education institutions should start responding to trends in the job market. The focus should be on preparing the youth for jobs in the service sectors. This would address the mismatch between the skills offered and employer demands.

Over the years, TVETs have focused on technical skills. However, this recent study points to an urgent need for a major paradigm shift in training on soft skills, entrepreneurship, sales and marketing and financial management skills, as per market demands. As long as academia does not dialogue with the labour market, the country will continue its ongoing rhetoric on the role played by manufacturing while ignoring the real drivers of youth employment. The starting point is to acknowledge that Kenya is a warehouse economy — then move from there.