Why taxman feels ‘cheated’ with creation of 591,000 jua kali jobs

By PAUL WAFULA

Kenya created 660,000 new jobs last year, 90 per cent of which were in the informal sector, commonly known as jua kali.

This is despite a slowdown in the momentum of job creation. The creation promises to retain the burden of collecting revenue on a contracting group of salaried employees.

The taxman has been fighting a unsuccessful battle to recruit the informal sector in the tax bracket.

Fresh data from The Economic Survey 2013 show the country’s total employment outside small-scale agriculture and pastoralist activities grew to 12.7 million in 2012 from the 12 million in the previous year.

Job opportunities

The informal sector is estimated to have created 591,000 new jobs last year, compared to the 587,000 jobs injected in the economy in 2011.

This constituted 89.7 per cent of all the new jobs created. There were 68,000 jobs created in the modern sector in the year under review.

The new data is a pointer that the taxman will heavily rely on 10 per cent of the formal sector to raise the bulk of the Sh1.6 trillion budget.

It is also an indicator the economy is not creating enough quality jobs to absorb the hundreds of thousands of graduates seeking formal employment.

“This (job creation) was supported by increased activity in the construction, information and communication industries as well as the education and health activities,” the report by the Kenya National Bureau of Statistics (KNBS), released yesterday reads in part. 

The Teachers Service Commission, which recorded the highest increase in 2011, registered the lowest growth of 0.8 per cent last year.

The greatest headache is the wage employment in the modern sector having registered a negative growth of 3.1 per cent last year.

This saw the number of self-employed and unpaid family workers engaged in the modern sector increase at a slower rate of 4.2 per cent in 2012 compared to the 5.7 per cent registered the previous year.

Data from the statistics agency showed the speed at which jobs were created decelerated to 5.5 per cent compared to a 5.8 per cent increase recorded in 2011. The average nominal earnings per employee rose 4.7 per cent in 2012, compared to the 4.6 per cent in 2011. Despite this, the actual earnings contracted by 4.8 per cent last year. This was an improvement from considering that the real average earnings decreased by 8.4 per cent in the previous year.

Less income

Employees earned much lesser due to inflation and other factors that eroded their purchasing power.  According to the KNBS data, average annual earnings were higher in the public sector at Sh460,664.5 than in the private sector at Sh420,578.3 in the review period. The top paying jobs in the private sector were for workers in finance and insurance and international organisations, who were paid approximately three times the national average. The growth in employment in the ICT was attributed to the expansion of the money transfer services. Employment government registered a decelerated growth of 1.2 per cent in 2012 compared to an increase of 3.7 per cent in 2011.

Most of the new salaried jobs were created in Nairobi (17,000), with the rift valley region coming in second with 14,200 of the salaried jobs.

Agriculture, forestry sector now has 296,000 employees in the private sector.  Manufacturing sector has about 249,000 new jobs. Wholesale and retail trade; repair of autos absorbed about 165,000 employees.