February 26th 2018

Business / Economy

One million jobs still a mirage, survey shows

Kenya created 841,600 jobs in 2015, according to the Economic Survey just released. Of these, only 128,000 jobs, or 15 percent, were in the modern sector.

By Jack Otwalanewsdesk@kenyafreepress.comTuesday, 24 May 2016 15:11 EAT

Kenya created 841,600 jobs in 2015, according to the Economic Survey just released. Of these, only 128,000 jobs, or 15 percent, were in the modern sector.

This was an increment of about 4.9 per cent (802,287) jobs that were created in 2014. According to the report, the total employment created outside small-scale agriculture and pastoralist activities increased by 5.9 per cent to 15.2 million persons in 2015.

“Informal sector employment rose by 6.0 per cent to 12.6 million persons, with a share of 82.8 per cent of total persons engaged,” the report said.

The number of self-employed and unpaid family workers engaged in the modern sector grew by 19.6 per cent in 2015 compared to 22.9 per cent recorded in 2014.

During the period the nominal wage bill rose from Sh1.311 trillion in 2014 to Sh1.497 trillion in 2015. This was an increase of 14.2 per cent compared to 12.0 per cent in 2014.

However, one of the key issues which analysts, critics and experts noticed is that despite promises made by the Government in 2013, the number of jobs created in the year was still far from the 1 million that had been promised during the campaigns.

“We will generate a million new jobs every year as part of our election promises in 2013,” President Uhuru Kenyatta said. The administration had campaigned largely on the youth agenda also promised to deliver an economic growth of between seven and 10 per cent in the first two years in power.

When Kenyatta took over in 2013 data from Economic Survey indicated that about 0.6 million jobs were created in 2012. However, the real jobs - which could be attributed to his leadership was published in the 2014 survey.

In the Economic Survey 2014, which published what happened in 2013, indicated that about 742,000 jobs were created. Analysts attribute the increase in number of jobs created to growth in labour intensive sectors.

According to the survey the total number of persons enrolled in both formal and informal sectors increased from 12.8 million in 2012 to 13.5 million in 2013, translating to 742,800 new jobs.

The formal sector recorded 116,000 new jobs, 26,300 of which were created by the Government. The expansion of jobs in the public sector was mainly attributed to the recruitment in the devolved structures and employment of more teachers.

In 2015, the Government reported that 799,700 jobs had been created. The Government explained that it failed to realise 1 million promised by the Jubilee due to depressed activities in the agricultural sector and reduced absorption of employees in counties.

It’s not clear this time round whether the number will go down or rise in Economic Survey 2016. However what is clear is that probably the sectors where the Government wanted to create the jobs did not get enough incentives.

Out of the total jobs created since 2013, the bulk of the jobs were created in the informal sector, which accounted for the lion’s share of the new jobs. What this indicates is that for the Government to create jobs there are certain sectors which they have lay emphasis on.

Having most jobs in the informal sector means the government will have more trouble getting this group to contribute significantly to the income tax revenue. Kenya generates about half of its entire revenues from income tax.

Analysts claim that the younger companies create more jobs, regardless of their size. A senior economist at Devolution and Planning Ministry Benson Mapesa argued that all startup firms operate help in creating new jobs.

“If the startups firms survive in the first five years they can grow faster than more mature companies and creating a disproportionate share of jobs relative to their size,” he argued.

John Kirimi, director Sterling Investment Capital explained that in Kenya the sector that can create jobs faster is the ICT. He says if the Government wanted to create 1 million jobs as had been promised, investment into the sector must be increased.

Kirimi added that agriculture sector which has been leading in creating new jobs is already saturated and there is need to expand it in order to accommodate and create more jobs.

However, Kwame Owino, Chief Executive Officer of the Institute of Economic Affairs (IEA-Kenya) said that manufacturing sector can create jobs even when other sectors remained stagnant.

He said improving the manufacturing sector will benefit all Kenya but the growth requires adjustments to tax and trade rules.

Jack is a business and society writer at the Kenya Free Press

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