740,000 new jobs put the economy on recovery path

Money Markets

Road construction workers. The construction sector also expanded its contribution to the GDP to 4.1 per cent from 3.7 per cent the year before. Photo/FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• The economy weathered the severe political shocks associated with last year’s election to generate nearly 750,000 jobs even as economic growth stayed below the projected five per cent.
• The majority of the new private sector jobs were in the construction and service industries while the public sector mostly added to the jobs count with expansion in health, education and security sectors.
• At 742,800 the number of new jobs created in 2013 was nearly 100,000 more than the 665,800 generated in 2012 when the rate of economic expansion stood at 4.6 per cent.

Kenya’s economy last year gave the clearest signal yet that it was on course to full recovery after it generated the largest number of jobs since 2010.

Official data released Tuesday shows that the economy weathered the severe political shocks associated with last year’s election to generate nearly 750,000 jobs even as economic growth stayed below the projected five per cent.

Analysts cautioned that data from the department of planning was hardly a cause for celebration even as they acknowledged that it eased fears of a possible dip in the election year that has traditionally dogged Kenya — slowing down jobs growth in a country that is sitting on an unemployment time bomb.

Though the more than 742,800 new jobs created in 2013 was still short of the one million jobs required to stem the tide of mass youth unemployment, economists said sustaining the momentum offers Kenya the best chance ever to defuse the threat of social strife associated with jobless and adds impetus to the fight against poverty. 

The majority of the new private sector jobs were in the construction and service industries while the public sector mostly added to the jobs count with expansion in health, education and security sectors.

“Growth [of jobs] in the formal-private and informal sectors is attributable to economic growth, especially in labour-intensive sectors such as wholesale and retail trade, and construction,” Planning and Devolution minister Anne Waiguru said as she released Economic Survey 2014.

At 742,800 the number of new jobs created in 2013 was nearly 100,000 more than the 665,800 generated in 2012 when the rate of economic expansion stood at 4.6 per cent.

Job creation was much slower in the formal sector though the jump to 116,800 was nearly double the 64,900 created the previous year.

The formal sector’s ability to create jobs partly benefited from the rapid expansion of public sector employment with the establishment of county governments following last year’s election.

Nominal average wage earnings in the formal sector also grew by 13 per cent helped by last year’s 14 per cent rise in the minimum wage and the 18.2 per cent salary increment for unionisable employees who had registered their dispute with the Industrial Court.

The 13 per cent wage increment outweighed the overall inflation rate, allowing real earnings to rise by 7.7 per cent in 2013 compared to a decline of 3.1 per cent the previous year.

Inflation stood at 5.7 per cent in 2013 down from 9.6 per cent in 2012 and 14 per cent in 2011, giving wage earners some purchasing power.

The average annual pay in the modern sector also rose to stand at Sh497,488 in 2013 compared to Sh440,364 the previous year, amounting to an average of Sh41,457 a month compared to Sh36,697 the previous year.

The Jubilee government aims to create at least a million jobs annually, a target that economists say can only be achieved if economic growth rises above the seven per cent medium-term target. 

Ms Waiguru said growth in 2013 was constrained by a slowdown in the agricultural sector which grew by a margin of 2.9 per cent compared to 4.2 per cent in 2012.