FKE decries the shrinking formal sector

Jua kali artisans make metal boxes along Landhies Road in Nairobi last month during the back to school week. Over 90 per cent of the jobs created were in the informal sector. [Edward Kiplimo, Standard]

The employer’s lobby has decried the high level of informal sector workers compared to formal ones, blaming it on poor employment policies and high cost of doing business.

The Federation of Kenya Employers (FKE) warned that Kenya is creating more casual jobs at the expense of white collar ones, and called for a national debate to reverse the situation.

“The Government says about 833,000 jobs were created in 2016. However, 90 per cent of the jobs created were in the informal sector,” said FKE Chief Executive Jacqueline Mugo.

While the economy is projected to grow at above five per cent this year, she observed that the same is yet to translate into more employment opportunities.

“Even though the Government is saying many jobs were created, what kind of jobs we are creating is a very important question,” she pointed out

The employers’ umbrella body blames the growth of informal jobs as opposed to formal ones on Kenya’s poor planning policies and a rigid legal framework.

“The policies are not helping the informal businesses to transit into established formal businesses and also the small formal businesses to grow and become big businesses. Further, many companies have instead laid off staff while others have all together closed shop in Kenya, she said.

“We are coming from a tough season (2017 elections). However, the tax burden is huge while the regulatory framework is unpredictable, which is not good for business,” Ms Mugo explained.

She noted that many of the informal sector players do not contribute to both National Hospital Insurance Fund and National Social Security Fund, leaving the burden to formal players who are shrinking in size at an alarming rate.

Even though the emerging sectors such as infrastructure, oil, are said to be creating new jobs, these jobs are temporary.

The FKE boss observed that the economy of Kenya as well as Africa’s is growing at a faster rate, adding that the future lies in the continent.

“Unfortunately the high economic growth does not reflect in the growth of jobs” said Ms Mugo on Wednesday after hosting a management board meeting set to prepare for the upcoming employment forum.

“The cost of basic commodities is higher than the purchasing power of the population. Majority of Kenyans are finding it difficult to meet their basic needs that include education, affordable housing and access to quality medical care,” said Mugo.

This, she said, was one of the reasons FKE wants employers, Government and other stakeholders to dialogue and seek solutions to the unemployment crisis before it’s too late.

Kenya is set to host employer organisations from more than 20 African countries early next month.

The President of the International Organisation of Employers is expected to attend.

The event dubbed, ‘Enterprise Forum on Entrepreneurship and Employment Creation’ will bring together employers in Africa, BusinessAfrica and more than 4,000 employer organisations to discuss the unemployment crisis.

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