800,000 jobs created in Kenya! Where are they?

Graduands at a recent graduation ceremony. [PHOTO: DAVID NJAAGA/STANDARD]

President Uhuru Kenyatta’s government promised to generate a million new jobs every year as part of election promises.

The Jubilee administration, which campaigned largely on the basis of being a youthful team, also promised to deliver an economic growth of between seven and 10 per cent in the first two years in power.

But as Kenyans marked the second Labour Day celebrations on Friday, it was clear the administration had not delivered on these two promises that endeared them to Kenya’s youthful population.

Two years down the line, the economy contracted from 5.7 per cent in 2013 to 5.3 per cent last year, taking a beating from the decline in tourism and manufacturing. Worse, the economy injected about 30,000 less quality jobs in 2014 than it did the previous year.

This is after new jobs created in the modern sector declined from 134,200 to 106,300 last year. This means the country was on average creating about 8,850 new jobs in the formal sector every month. Until last year, the number of new jobs in the modern sector generally were increasing in the last five years. According to the report, 2014 was the first time in the last five years that this trend was reversed.

The economic survey 2015 released this week explains that this dip was mainly due to depressed activities in the agricultural sector and reduced absorption of employees in counties.

But the Government is counting on the informal sector, that accounted for the lion’s share of the 799,700 new jobs injected in the economy to bring the total number of people employed outside small scale agriculture and pastoralist activities to 14.3 million.

From all the jobs created, the informal sector which accounted for 82.7 per cent of all jobs, generated 693,400 new jobs—the bulk of all the new jobs. Having most jobs in the informal sector means the government will have more trouble getting this group to contribute significantly to the income tax revenue.

Kenya generates about half of its entire revenues from income tax. According to the report, programmes such as the Uwezo Fund which provide youth and women with access to grants and interest free loans to set up businesses, have impacted positively on the labour market.

Devolution of some services and functions to counties has increased economic activities impacting positively on employment creation, the report notes.

Dr Gerrishon Ikiara, an economics lecturer at the University of Nairobi says it is possible that Kenya’s economy could have created more than 800,000 jobs.

“Most of these jobs are in the informal sector where the business enterprises are not registered for tax purposes. These jobs range from working at building sites, digging trenches for laying of fibre optic cables, ladies washing clothes in residential houses, to those selling wares at second-hand clothes market to working at furniture-making shops located on the roadside or within residential areas,” Ikiara explains.

In fact, he says it is the informal sector putting food on the table of most Kenyans. “It is unfortunate that we do not recognise jobs created in the informal sector despite the fact that those employed here are able to fend for their families.”

Ikiara illustrates: “A casual worker earning Sh300 daily or Sh9,000 per month could be having the same living standards as a graduate employed after college earning Sh20,000 gross.”

The Economic Survey says the overall growth in employment recorded in the modern sector, which comprises wage employees, self-employed and unpaid family workers, rose by 4.5 per cent last year.

This was also a decelerated growth compared to 6 per cent in 2013. Wage employment accounted for 95.8 per cent of the total modern sector employment in 2014. But it is the shrinking of the private sector that is set to worsen the unemployment rate in the country after the sector lost about 50 per cent of its job creation capacity.

The private sector generated 69,600 new wage employment opportunities in the year under review, down from the 106,200 recorded in 2013. A slowdown in the agricultural sector always has a direct hit on the economy because the sector accounts for almost a third of the countries GDP. “Decline in the sector employment creation was mainly recorded in the agriculture, forestry and fishing, electricity, gas, steam and air conditioning supply sectors a swell as in accommodation and food services,” the report notes.

Fewer quality jobs

Despite the sorry state of affairs, the sector is set to be the key job creation engine after the government froze employment in key sectors to deal with the surging wage bill. Counties are also grappling with an excess work force. The private sector recorded a suppressed growth of 4.4 per cent down from the 7.1 per cent recorded in 2013. However, the Government continues to keep the public guessing on the actual unemployment rate in the country. Developed countries issue unemployment rate numbers almost every quarter to show the direction of job creation. But 55 years since KNBS begun producing the Economic Survey report, the statistician’s body has kept away from the unemployment rate data.

From such data, it would be clearer to tell if the pace at which the new jobs are coming on board matches the number of skilled people graduating from colleges and universities. But from the available data, it is clear the economy is creating fewer quality jobs than the skilled professionals. 

A case in point is in the teaching profession. Ten years ago, it was almost certain one would get a job as soon as they graduate. But at the moment, it can take some graduates up to five years, or even more to land a permanent teaching job. Available data shows that 70 per cent of unemployed people in Kenya are youthful. Youth aged between 18 and 35 form a third of the total population. As the number of formal sector jobs shrink, enrolment of students in public universities and technical colleges continues to grow in double digits.

Total university student enrollment rose 22.8 per cent from 361,379 in 2013 to 443,783 last year. This is almost four times the number of jobs being created in the modern sector. On their part, technical training institutions enrolled 148,142 students in the year under review.

Total employment in the public sector increased marginally from 683,300 in 2013 to 700,800 last year. This is an increase of 2.6 per cent compared to 3.2 per cent realised in 2013. This was attributable to slowdown in absorption of more employees in the counties and limited recruitment by the national government.

The enrollment figures will be higher if the students in private institutions are added. Nominal average earnings per person increased from Sh514,630 in 2013 to Sh555,177 which translates to about Sh46,000 per month.