Uhuru government misses new jobs target as economic growth slows down

Politics and policy

From left: Planning secretary Anne Waiguru, KNBS director-general Zachary Mwangi, Planning PS Peter Mangiti and KNBS chairman Terry Ryan display copies of the Economic Survey 2015 during its release at the KICC in Nairobi on April 29, 2015. PHOTO | SALATON NJAU 

By GEORGE OMONDI, omondi@ke.nationmedia.com

In Summary

• The Kenyan economy created only 106,300 formal jobs after growth slowed down to 5.3 per cent from 5.7 per cent the previous year.
• The economy created 134,300 new formal jobs in 2013, meaning last year’s performance was 20.8 per cent less than the preceding year.

The Kenyan economy generated fewer formal sector jobs for the first time in five years, worsening the country’s labour market that came under additional pressure from the more than 400,000 graduates who left college to begin the search for employment.

Official data released on Wednesday shows that the economy created only 106,300 formal jobs after growth slowed down to 5.3 per cent from 5.7 per cent the previous year, taking the Jubilee government farther off the one-million-jobs-a-year target it had set upon coming to power.

The economy created 134,300 new formal jobs in 2013, meaning last year’s performance was 20.8 per cent less than the preceding year.

Out of the new jobs generated last year, the private sector accounted for 69,600 compared to 106,200 the previous year.

The public sector’s performance was not any different, having added only 17,500 jobs (mostly at the counties) compared to 21,200 the previous year. An additional 19,500 formal sector jobs were generated by people in self-employment.

“The trend in the number of new jobs created has generally been increasing over the years but was reversed in 2014 with the exception of the self-employed,” the Economic Survey 2015 says.

The reduction in the number of new formal sector jobs is set to pile pressure on households as the few workers with regular wages — which remained nearly stagnant — have to continue supporting a large number of dependants some of who have finished college but cannot find jobs.

The pain of mass unemployment will be even more severe if the public sector, which pays higher wages than the private sector, cuts employment.

Fresh data coming out of the Economic Survey 2015 shows that public sector salaries are still higher with government employees earning an average of Sh49,740 per month after they got an annual increment of 8.8 per cent last year compared to the private sector employees’ Sh44,807.

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Average annual inflation stood at 6.9 per cent but the overall average annual formal sector earnings grew by 7.9 per cent from Sh514,630 to Sh555,177 last year, leaving the workers in a neutral purchasing power position.

The wage growth performance was less than half the 16.1 per cent recorded in 2013 when the average inflation rate stood at 5.7 per cent.

The Kenya National Bureau of Statistics (KNBS) said the the lower average wage growth was due to the government’s decision not to increase the minimum wage in 2014.

Overall, the economy created a total of 799,700 informal and formal jobs, a marginal increase on the 750,000 jobs created in 2013 but 200,300 short of the annual target that the Jubilee government set for itself in 2013. 

The majority of the new formal jobs from the private sector were in the mining and quarrying, construction and service industries while the public sector mostly added to the jobs count with expansion in water supply and sewerage, power generation, health and security sectors.