Salaried jobs drop for first time in 20 years

The number of formal jobs in Kenya last year contracted for the first time in two decades, reflecting the struggles of the economy that also shrank for the first time since 1992 on the back of coronavirus-induced shutdowns and restrictions.

The annual economic data released by the Kenya National Bureau of Statistics (KNBS) on Thursday showed the economy shed 187,300 formal jobs in the year ended June 2020, marking the first time since 2001 when some 18,300 salaried workers were struck off payrolls.

The loss of formal jobs was more pronounced in the private sector, which laid off some 206,700 workers in a period businesses faced a tough operating environment, including reduced operating hours as a result of nighttime curfew and travel restrictions to contain the death-threatening pandemic.

The number of wage employees in the private sector dropped below 1.86 million in June 2020 from more than 2.06 million a year earlier, according to the provisional statistics, on the back sustained shedding of jobs in the formal employment segment by companies after the first case of Covid-19 in the country was confirmed mid-March 2020.

“Confirmation of the existence of the (Covid-19) disease necessitated taking drastic measures by the government, to curb the spread of the virus and to minimise the risk of infections at workplaces,” KNBS says in the Economic Survey 2021.

“Consequently, cessation of movement in and out of some regions, closure of some businesses with high-exposure and reduction of business operating hours due to introduction of curfew, adversely affected employment in several sectors.” 

The loss of jobs was also witnessed in the informal sector, popularly known as the Jua Kali — which accounts for about 83 percent of total jobs in Kenya — as well as those in self-employment (running own businesses) and unpaid employment in family ventures.

The Jua Kali sector, which has been a driver of new job opportunities for many years, shed an estimated 543,600 workers in the review period to 14.508 million — accounting for 83.35 percent of 17.405 million total workers in the country.

The number of self-employed workers also fell 6,600 to 156,100 in the period through June 2020, the findings of the Economic Survey 2021 show.

In total, the economy lost 737,500 jobs in the review period compared to additional 847,100 jobs created the year before.

Kenya’s gross domestic product (GDP) shrank 0.31 percent last year from a 5.0 percent growth in 2019 on the back of Covid-19 knocks on economic activities such as tourism and education.

This was the first annual GDP contraction since 1992 when the output slid 0.8 percent.

“When we were hit by Covid, those of us in the Treasury were nervous on how we were going to navigate, but we put systems in place and we put Kenyans at the heart of our planning,” Treasury Cabinet Secretary Ukur Yatani said during the release of the Economic Survey 2021.

“The idea was not just to cushion Kenyans and businesses, but also increase liquidity in the economy so that Kenyans will have opportunity to work and continue creating wealth despite the challenges.”

The loss of jobs is a major blow to nearly one million young people who graduate from various educational institutions every year in hope of landing work to support their livelihoods as well as their families.

President Uhuru Kenyatta’s administration, which start off in 2013 with a pledge to create a million modern jobs every year, has struggled to generate decent employment opportunities, with the economy barely churning out 100,000 formal jobs in recent years.

Nearly 1.2 million young Kenyans eligible for work (aged between 20 and 34) had given up the search for jobs between July and September last year, according to the quarterly labour data report released by the KNBS last December.

“We have come up with certain targeted stimulus interventions, and that’s why you hear about Kazi Mtaani (youth employment programme) which many people may criticise, but you know what it has done for very many youth … by supporting the slum economy. That had a relieving effect on the economy,” Mr Yatani said.

KNBS data shows average earnings per employee increased by 3.02 percent to Sh66,809 per month last year from 64,852 the year before. The pay raise was slower than 8.09 percent last year from Sh59,997 per month in 2018.

This means the rise in workers’ take-home pay underperformed inflation, bucking the trend in the previous two years.

Average inflation stood at 5.4 percent last year, meaning the rise in the cost of living eroded workers’ purchasing power.

Average wages in the private sector increased 3.82 percent to Sh67,490 per month from Sh65,006 the year before, while average earnings in public sector went up 1.38 percent to Sh65,378.80 per month.

“The job market has not recovered. For us to recover, the focus and any support should be on helping enterprises to bounce back especially in the productive and job-rich sectors that have been hit by the pandemic such as manufacturing, transport, tourism, and aviation. This will have a positive impact on jobs and incomes,” Federation of Kenya Employers (FKE) executive director Jacqueline Mugo said in May.