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November 16, 2018

Why this failure to create jobs?

Thousands flock Machakos People's Park to secure  jobs. Photo/FILE
Thousands flock Machakos People's Park to secure jobs. Photo/FILE

For those who went to college at a time when a university degree really meant something, there is no sadder sight to be seen than a young Kenyan walking the streets with a placard proclaiming their status as an unemployed graduate.

This is because they know that behind every such young graduate, there is a family which made enormous sacrifices in order to get that one son or daughter through college, in the hope that they would be the key to that family’s rise from poverty.

There was a time when this kind of thinking would be routinely validated. The young graduate would go on to get a good job, and, in turn, making great sacrifices and practising self-denial, get his or her younger siblings through school, and in due course build his parents a decent house.

This is not to say that back in the early 1980s there weren’t kids to be found in public universities who were from families rich enough to buy their son or daughter a car for a graduation present. There certainly were. But they were so few as to be statistically insignificant.

The great majority of university students – almost invariably the first in their family to go to college – looked forward to graduation as the doorway to the opportunity to repay their parents for the sacrifices they had made over the years.

So what happened? Why is it that at this time the word ‘graduate’ is so often preceded by ‘unemployed’?

I believe a key factor behind this tragedy is that our political class is not really interested in the kind of low-key economic opportunities where jobs can be created in the hundreds of thousands. They very much tend to prefer glamorous, high-profile prestige projects that have little or no “multiplier effect”.

Two examples support me in this accusation. First is that of call centres, a field that has long been dominated by India and, more recently, the Philippines. Each country has well over 300,000 young people employed in call centres.

Working in a call centre may not be the most prestigious kind of employment. But it is a source of steady income, and training for this work – specifically when the call centre is set up to service clients in the UK and the US – is really just about acquiring computer skills and learning “to talk without a local accent”, something many young Kenyans already strive to do to impress their friends.

There is no reason why Kenya should not also have had hundreds of thousands employed as call centre operators, if the government had offered the right incentives for investors in this field to come and set up shop here.

Instead we only have an estimated 7,000 people employed in this field.

The other is in the textile industry, which is one of the relatively few labour-intensive economic sectors in which advanced nations do not even bother to compete with poorer nations.

The standard approach here is to set up an Export Processing Zone where fabrics can be brought in untaxed, and the finished products would then be exported, once again, without being taxed. For the point in an EPZ is to create employment, not to generate direct tax revenues.

Well you might think that Kenya’s dozens of EPZ factories, employing an estimated 50,000 people, are noteworthy. But that probably would be because you did not know that Bangladesh has about 4,500 such factories, employing about four million textile workers.

Incidentally, the reason why it is easy to find these statistics on Bangladesh is that these factories are often in the news for the wrong reasons. They seem to catch fire every so often, and strikes take place all the time. But for our purposes, the important thing is that these jobs do exist.

And these are mostly low-skilled jobs requiring just a few weeks of training before the newcomer can be productive in the “assembly line” mode of production which such factories employ.

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