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Create more jobs from manufacturing

By Ken Opalo | July 25th 2020 at 12:00:00 GMT +0300

Development is fundamentally about people. A developed society is one in which people are properly fed, clothed  and housed, and have ample opportunities to live their lives to the fullest and have a decent standard of living.

One of the most reliable ways of guaranteeing individuals a decent standard of living is permanent employment. Good jobs not only provide predictable income, but also enable individuals to participate meaningfully in society. 

One way of providing decent jobs is by growing the manufacturing sector. So how are we doing as far as employment goes in this sector? According to the latest census of industrial production conducted by the Kenya National Bureau of Statistics, only about 200,000 individuals were permanently employed in the manufacturing sector in 2017.

This means more than 150,000 employees in the manufacturing sector were either contract, casual, apprentice or unpaid workers. Employment in manufacturing accounted for two per cent of the total labour force, and just over 13 per cent of the formal sector employment. For comparison, in Vietnam, the manufacturing employment as a share of employment was 17.4 per cent in 2017.  In other words, we have room for growth. 

Keen followers of the government’s manufacturing agenda (including Big Four) know that it is official policy to increase the share of manufacturing in the economy from 10 per cent to 15 per cent. A key lesson from the employment data is that as we do so, we should ensure growth in manufacturing is accompanied by growth in the number of decent jobs. One of the important lessons from Covid-19 is that dependable employment is a double-edged sword in the face of economic shocks. While formal employment enables the government (in collaboration with employers) to provide unemployment assistance during crises, it also comes with risks.

A good formal sector worker essentially puts all their eggs in one basket, thereby leaving them exposed to penury if they ever lose their job during economic downturns. While the informally employed may have greater ability to switch jobs (including going back to farming), formal sector workers typically lack outside options. Juggling a side hustle while also fulfilling the demands of one’s day job is really hard. It is for this reason that as we work to grow manufacturing in the country, we must also be cognizant of what that will mean for workers. 

Highly productive workers in a growing manufacturing sector will need training, unemployment insurance against economic downturns, and the possibility of retraining in the event they need to switch jobs. In addition to caring for individual workers, the State ought to think of other sectors that enable workers to thrive – such as affordable food, housing, schools and healthcare. We do not have to build a manufacturing sector on the sweatshop model of long hours and poor pay.

For far too long we have essentially tolerated this model of employment with disastrous consequences. The mushrooming of slums and endemic poverty in significant sections of our urban areas is evidence that most of our workers do not make enough money to live on.

The two options available are to increase wages, or collectively come up with ways of lowering the cost of living. The latter is obviously the better choice. Effective provision of public goods and services would undoubtedly serve to lower the cost of living, thereby guaranteeing our workers decent living and economic security. We need investments in systems that provide decent standards of living and can withstand economic shocks, such as Covid-19. 

- The writer is a professor at Georgetown University


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