Uhuru government misses new jobs target as economic growth slows down

From left: Planning secretary Anne Waiguru, KNBS director-general Zachary Mwangi, Planning PS Peter Mangiti and KNBS chairman Terry Ryan display copies of the Economic Survey 2015 during its release at the KICC in Nairobi on April 29, 2015. PHOTO | SALATON NJAU
From left: Planning secretary Anne Waiguru, KNBS director-general Zachary Mwangi, Planning PS Peter Mangiti and KNBS chairman Terry Ryan display copies of the Economic Survey 2015 during its release at the KICC in Nairobi on April 29, 2015. PHOTO | SALATON NJAU 

The Kenyan economy generated fewer formal sector jobs for the first time in five years, worsening the country’s labour market that came under additional pressure from the more than 400,000 graduates who left college to begin the search for employment.

Official data released on Wednesday shows that the economy created only 106,300 formal jobs after growth slowed down to 5.3 per cent from 5.7 per cent the previous year, taking the Jubilee government farther off the one-million-jobs-a-year target it had set upon coming to power.

The economy created 134,300 new formal jobs in 2013, meaning last year’s performance was 20.8 per cent less than the preceding year.

Out of the new jobs generated last year, the private sector accounted for 69,600 compared to 106,200 the previous year.

The public sector’s performance was not any different, having added only 17,500 jobs (mostly at the counties) compared to 21,200 the previous year. An additional 19,500 formal sector jobs were generated by people in self-employment.

“The trend in the number of new jobs created has generally been increasing over the years but was reversed in 2014 with the exception of the self-employed,” the Economic Survey 2015 says.

The reduction in the number of new formal sector jobs is set to pile pressure on households as the few workers with regular wages — which remained nearly stagnant — have to continue supporting a large number of dependants some of who have finished college but cannot find jobs.

The pain of mass unemployment will be even more severe if the public sector, which pays higher wages than the private sector, cuts employment.

Fresh data coming out of the Economic Survey 2015 shows that public sector salaries are still higher with government employees earning an average of Sh49,740 per month after they got an annual increment of 8.8 per cent last year compared to the private sector employees’ Sh44,807.

Average annual inflation stood at 6.9 per cent but the overall average annual formal sector earnings grew by 7.9 per cent from Sh514,630 to Sh555,177 last year, leaving the workers in a neutral purchasing power position.

The wage growth performance was less than half the 16.1 per cent recorded in 2013 when the average inflation rate stood at 5.7 per cent.

The Kenya National Bureau of Statistics (KNBS) said the the lower average wage growth was due to the government’s decision not to increase the minimum wage in 2014.

Overall, the economy created a total of 799,700 informal and formal jobs, a marginal increase on the 750,000 jobs created in 2013 but 200,300 short of the annual target that the Jubilee government set for itself in 2013. 

The majority of the new formal jobs from the private sector were in the mining and quarrying, construction and service industries while the public sector mostly added to the jobs count with expansion in water supply and sewerage, power generation, health and security sectors.

Mining made a surprise entry to the list of top employers after Base Titanium began to export minerals from its Kwale site last year.

The data shows that a total of 14.3 million people were engaged outside small-scale farming and pastoralist activities last year, up from 13.5 million in 2013.

Just like the years before, the informal sector had the largest share of employment, accounting for 82.7 per cent of the new jobs reported.

The failure by the Jubilee government to achieve its job creation target has been blamed on slow growth of the labour-intensive sectors like agriculture, manufacturing and tourism, which is still reeling from security threats.

“Agriculture, manufacturing, retail and trade as well as motor vehicle repair continued to be major sources of employment,” the survey says.

The data released on Wednesday, however, shows that security concerns pulled down tourism earnings by 7.3 per cent to Sh87.1 billion in 2014 from Sh94 billion the previous year.

Agriculture, which contributed 27.3 per cent of the GDP, expanded by a modest 3.5 per cent from Sh795 billion in 2013 to Sh822.5 billion last year. This growth was lower than the 5.2 per cent recorded the previous year.

Similarly, manufacturing, which accounted for 10 per cent of GDP, grew by 3.4 per cent to Sh537.3 billion last year compared to a growth of 5.6 per cent in 2013. 

Instead, sectors with short value chains like building and construction, mining, transport and ICT were the top performers of 2014.

Building and construction expanded by 13.1 per cent, mining by 14.2 per cent, transport by 13.7 per cent and ICT by 13.4 per cent last year.

“The performance of agriculture in 2015 is likely to remain close to the 2014 level after the country experienced depressed rainfall in the first quarter,” Devolution and Planning secretary Anne Waiguru said when she presided over the release of Economic Survey 2015.