EDITORIAL: Slow jobs growth should preoccupy policy makers

Treasury Secretary Ukur Yatani during the launch of the 2020 Economic Survey in Nairobi on April 28, 2020. PHOTO | EVANS HABIL | NMG 

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Summary

• The annual Economic Survey produced by the Kenya National Bureau of Statistics is out and as usual in recent years makes for disturbing reading.
• To begin with, the economic growth slowed down, predictably weighed down by erratic weather — which the administration has failed to mitigate against despite alluring electoral promises — to 5.4 percent.
• In 2018, the economy expanded by 6.3 percent, but not enough was done to lift millions from poverty or structural unemployment.
• More grim readings come when the sectors are disaggregated with all of them registering falling expansion, including the manufacturing and agriculture, which are crucial to economic growth.

The annual Economic Survey produced by the Kenya National Bureau of Statistics is out and as usual in recent years makes for disturbing reading. To begin with, the economic growth slowed down, predictably weighed down by erratic weather — which the administration has failed to mitigate against despite alluring electoral promises — to 5.4 percent.

In 2018, the economy expanded by 6.3 percent, but not enough was done to lift millions from poverty or structural unemployment. More grim readings come when the sectors are disaggregated with all of them registering falling expansion, including the manufacturing and agriculture, which are crucial to economic growth.

Worse still, the Treasury forecasts growth to dip again this year, arising from the massive hit from the restrictions on economic activities aimed at stemming the spread of Coronavirus across the globe.

Admittedly, economic growth is a short-term measure albeit with potential to morph into structural situations. That is why the country needs to focus on at least the medium term in addressing the findings of the document issued yesterday, understandably with less pomp than in previous years.

A key issue is obviously slowing job creation in both the formal and informal sectors — a situation inevitably set to be made much worse by current pandemic-inspired semi-lockdown, hopefully affecting this year alone. In the formal sector thought to create quality jobs 78,400, were created down from 80,800 a year earlier.

This was the slowest pace of formal job growth since 2012 when the economy generated only 75,000 jobs. In the informal sector, new jobs rose from 744,000 in 2018 to 767,900 last year which is not much to write home about in a country with runaway unemployment.

It will be remembered unemployment was the key takeaway of the 2007/08 post-election chaos with the team seeking for solutions coming up with article IV to resolve the matter.

Despite some effort to implement the resolutions, the situation remains the same if not worse.

That's why we reiterate industry and agriculture must be made to work at full throttle for the danger to clear away. Tariffs and policies must favour the domestic sectors, vis-à-vis regional and international, for a quick turnaround.

Credit should be directed in the right direction to stimulate the most productive sector and the ones that generate most jobs.

Unless this happens we will continue living dangerously.