Formal jobs fall to 6-year low despite GDP boom

The number of formal jobs generated by the economy fell to a six-year low in 2018, worsening the plight of school leavers in the year that the Jubilee Administration recorded its best economic performance, official data has shown.

The data released ay by the Kenya National Bureau of Statistics (KNBS), indicates that only 78,400 new formal jobs were created in the economy last year compared to 114,400 in 2017.

This is the slowest pace of formal job growth since 2012 when the economy churned out 75,000 official jobs.

The drop raises queries over equitable distribution of the growth dividend among Kenyans considering that the economy expanded over the same period by 6.3 percent -- the highest rate since 2010 when the country recorded an 8.4 percent growth.

KNBS attributed the firm economic performance to increased investment in infrastructure and the rapid expansion of agriculture, fish and forestry sectors which together recorded a 6.4 per cent growth.

However, the bureau attributed the slow pace of formal sector job creation to an employment freeze in the public sector.

“This decline was partly attributed to the expiry of hired temporary workers of the Independent Electoral and Boundaries Commission (IEBC), and stabilisation of employment by counties,” says the Economic Survey 2019 released Thursday.

Job seekers

The drop in the number of formal jobs is a blow to job seekers, especially the close to one million young people who graduate from various educational institutions every year.

According to the latest figures, the number of informal jobs also dropped to 762,000 last year compared to 795,400 in 2017 -- suggesting a general defect in the government’s employment creation machine.

In total, the President Uhuru Kenyatta-led government, which rode to power with a promise of generating one million jobs every year, managed to create 840,600 (formal and informal) jobs in 2018 down from 909,800 the previous year.

In spite of the falling numbers, private and public sector wage bill generally ballooned to Sh2 trillion in 2018, up from Sh1.823 trillion the previous year.

The average earning per employee increased by 7.6 percent from Sh55,520 per month in 2017 to Sh59,745 in 2018.

Out of the 2.765 million workers on wage employment in Kenya, the public sector accounted for 842,900 positions while the private sector absorbed the remaining 1.922 million workers.

The period saw the share of private sector employment increase from 69.1 per cent in 2017 to 69.5 percent as the public sector continued with its job freeze.

And unlike 2017, when workers’ take-home pay increments fell below the cost of living, workers had a stronger purchasing power last year, according to the official figures.

Cost of living

Employers on average beat inflation in adjusting workers’ annual pay, putting them in a stronger financial position compared to the previous year when the increment fell 2.9 percent shot of the cost of living measure.

“In private sector, average real earning (inflation-adjusted pay) per employee increased by 3.2 percent to Sh31,197 per month in 2018.

Similarly, real average earning per employee increased by 3.2 percent to Sh30,906 per month in public sector.”

The data shows that inflation rates for the 12 months of 2018 were generally down, dropping to an average of 4.7 percent, the slowest in the five years, compared to eight percent the previous year.

The drop was generally attributed the improved weather and lower prices of food and non-alcoholic beverages.

In spite of improved real wages, pay disparities persist between various sectors and sexes. While an employee generally earns higher in private than public sector, activities such as supplying water, agriculture and household chores continued to attract low pay across the sectors.

Women trail

Women employees also continued to trail their male counterparts in pay even in cases where they were represented by a common union.

“The analysis also shows that there is low participation of women in wage employment in most industrial activities,” said the KNBS survey.

Within the public sector, ministries awarded higher wage increments to employees — 12.1 per cent — compared to 10.5 per cent that counties offered their workers.