More Kenyan youth have over the last two years been forced to take up informal jobs despite being well educated as formal employment opportunities diminish, a new study has shown.
Some 754,185 Kenyan youth, aged 15 to 35, have taken up informal openings from 2024 to date, raising the rate of informal employment among them to 91.5 percent currently from 90.2 percent two years ago.
According to the Africa Youth Employment Outlook, a report done by World Data Lab, the MasterCard Foundation, and the University of Cape Town’s Development Policy Research Unit (DPRU), only 955,023 Kenyan youth, or 8.5 percent, are formally employed.
This is a drop from 1,044,893 in 2023, when formality rate was at 9.8 percent, reflecting a drop in formal jobs in Kenya as more young Kenyans enter the workforce amid slow job-creation.
Over the same period, the youth employment rate has remained almost constant at 53 percent, with about 1.2 million jobs being created for the young people, translating to an increase of about 6.3 percent, or just 2 percent every year.
Experts say this rate of job creation is too low compared to the rate of economic growth on the continent. On average globally, every one percent growth in the economy translates to about 0.7 percent expansion in jobs, but in Kenya, it leads to just about 0.4 percent growth in employment opportunities.
“The conversion rate from growth to employment is lower and for the same amount of growth, we create fewer jobs relative to the rest of the world and for young people, that conversion rate is much lower,” said Haroon Bhorat, an Economics professor at the University of Cape Town and director of DPRU.
“This is because the nature of growth we have is not the type of growth that generates large numbers of wage jobs or even low-skill wage jobs. Most of the jobs that are created are actually low-productivity informal sector jobs.”
At 8.6 percent, Kenya’s youth formal jobs rate is at the continent’s bottom half, with countries such as Mauritius, South Africa, and Libya leading with formality rates of 70 percent, 69 percent, and 54 percent respectively.
Yet, at 53 percent, Kenya’s employment rate is among Africa’s highest, but the majority of newly created jobs are in the informal sector.
In an earlier study, World Data Labs had projected that a majority of jobs created in Kenya between 2024 and 2030 would be in the construction industry. Wolfgang Fengler, World Data Lab CEO and former Kenya country representative for World Bank, argues that to reverse the trend and make quality job creation relative to economic growth, the growth must be accelerated.
“First, our growth must be higher. Then, the business environment should be improved. If entrepreneurs have the opportunity to hustle more efficiently, then they’ll also hire people more,” he told Business Daily.
