Employment rate slows as poverty hits rural Kenya

Overall growth fell to 4.9% in 2019

In Summary

•The greatest decline on employment was in formal employment, which decreased by 3.2 percentage points.

•This is expected to be worsened by Covid-19 effects on the economy as companies lay-off staff to cut on cost and remain afloat.

People in search of jobs.
UNEMPLOYMENT People in search of jobs.

Employment rate in the country has been on a downward trend in the past six years, a survey has revealed, with women feeling the brunt of unemployment more than their male counterparts.

The Kenya Economic Report 2020, by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), reveals overall growth in employment fell from 6.2 per cent in 2014 to 4.9 per cent in 2019.

This is despite a stable economic growth, which went up from 5.4 per cent in 2014 to 6.3 per cent in 2018, before decelerating to 5.4 per cent last year.

The greatest decline in employment was in formal employment, which decreased by 3.2 percentage points from a 5.8 per cent growth in 2014 to 2.6 per cent in 2019, with poverty reported to be high in rural areas.

“The decline in employment is mainly attributed to a freeze in formal employment by the Government to cut on the public sector wage bill. This restricted employment to only essential services such as health, education and security,” KIPPRA notes in the report.

The share of employment to population ratio and labour force participation rate have stagnated at about 60 and 67per cent, respectively, in the last decade.

Last year, the Jubilee administration, which came into power with the promise of creating a million jobs annually, created 846,300 jobs (both formal and informal)-Economic Survey 2020.

This was a slight improvement from 824,900 in 2018.

Last year, a total of 67,800 jobs were created in the modern sector.

The informal sector is estimated to have created 767,900 new jobs compared to 744,100 new jobs in 2018.

Themed “creating an enabling environment for inclusive growth in Kenya”, the Kenya Economic Report 2020 indicates agriculture is the dominant employer, accounting for 57.5 per cent of total employment.

The second-largest employment sector is services, accounting for 35.0 per cent of employment.

“Females face higher unemployment and poverty rates than their male counterparts,” the report indicates.

Gains made last year are however expected to be eroded by effects of Covid-19 on the economy, which has forced companies to lay-off staff with businesses closing down.

More than 5.9 million jobs had been lost by June, four months after the first Covid-19 case was reported in the country, in March.

Data compiled by the Kenya Private Sector Alliance(Kepsa), and shared with the government, reveled travel and tourism, construction and real estate, manufacturing, transport, agriculture, education and sports, arts and culture as mong the most hit.

“All the sectors have been affected,” National Treasury and Planning CS Ukur Yatani affirmed during the release of the Economic Survey 2020 in Nairobi, adding, “There is a lot of loss of jobs."

The CS has since revised downwards this year’s economic growth from a previous projection of 6.2 per cent, saying it is likely to decline to 2.5 per cent.

Meanwhile, rural poverty level remains higher, with poverty reduction pace slower than in peri-urban and core urban area.

“The high poverty level in rural areas is mainly driven by over-reliance on agriculture, compounded by low productivity. As such, there is need to improve agricultural productivity to fast-track the pace of rural-and national- poverty reduction,” KIPPRA, led by executive director Rose Ngugi notes.

Overall poverty incidence varies widely among counties, from as low as 16.7 per cent in Nairobi County to a high of 79 per cent in Turkana.

Counties with the lowest Gross County Product per capita have the highest poverty rates and are mostly in arid and semi-arid lands.

Poverty is also aggravated by large household sizes among the poorest counties.

The largest households are reported in Mandera (6.9), Wajir (6.1) and Garissa (5.9), where poverty rates are 77.6, 62.6 and 65.5 per cent respectively.

For an economy to generate more productive jobs, more employment should be concentrated in the manufacturing and ICT sectors, KIPPRA advices.

“To cushion the economy against major shocks arising from uncertain weather, desert locusts and other global challenges such as coronavirus pandemic, it is imperative to strengthen efforts towards maintaining macroeconomic stability, fiscal prudency, and political stability,” Yatani has said.