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[Antony Gitonga, Standard]
The best way to measure an economy’s health is how well ordinary workers can earn a decent living. Certainly, macroeconomic stability and aggregate growth matter. And it is great that we have a fair amount of stability in the broader economy.
But what really matters is how real Kenyans experience the economy. Stated differently, growth and stability are only as good as they produce development and improvements in our people’s material condition.
Along these lines, the creation of wage employment is an excellent indicator. Which is why one of the first things I look for whenever the Kenya National Bureau of Standards releases its numbers is the trend on job creation.
For example, over the last 5 years, private sector jobs have increased by about 330,000. Public sector jobs have grown by 138,000. For a country of 55m souls, and over 24m in the labor market, we only have a sum total of 3.2m formal sector jobs.
The 468,000 formal sector jobs, over five years, can barely absorb the almost 1m young Kenyans who enter the labor force each year. For example, in 2024, the economy created just under 76,000 jobs. In the same year, the economy barely created 7,000 jobs in manufacturing.
Interestingly, construction jobs declined by 2,600, despite the current administration’s spirited hawking of the affordable housing project as a massive job creator (it appears that most of the jobs, if there are jobs being created, are in the informal sector). Most of the job growth in the formal sector came from services.
On actual incomes, only 12.4% of wage-earning Kenyans make more than 100,000 per month. The vast majority fall in the 30,000-49,999 (32.2%) and 50,000-99,999 (45.5%) range. These distributions have not budged much for the better part of five years.
Why should we care about jobs (including their quality and the security they give workers)? For many reasons. First, secure jobs support our households, in addition to being a source of dignity and purpose. Second, jobs create aggregate demand in the economy.
Wage earners buy things, and are therefore able to support other jobs in the economy. So one of the most important policy mechanisms for locking in faster future jobs should be to create as many secure and well-paying jobs in the private sector as possible.
Finally, wage earners pay taxes and save for retirement. Taxes fund public goods and services (when not stolen by government officials). Retirement savings, ideally, provide cash for capital formation and other investments in the economy.
All said, we should be obsessed with job creation. KNBS should be mandated to provide monthly data on job creation and job losses. We should have a policy research team in the ministry in charge of labor whose sole mandate is to figure out how to create and sustain good jobs for our people.
The fact that we have resigned to our low-job creation equilibrium and instead embraced informality is a travesty. We need to, and must be more ambitious than this. We need to aim for at least 1m formal sector jobs each year.
The writer is a professor at Georgetown University, US
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The best way to measure an economy’s health is how well ordinary workers can earn a decent living. Certainly, macroeconomic stability and aggregate growth matter. And it is great that we have a fair amount of stability in the broader economy.
But what really matters is how real Kenyans experience the economy. Stated differently, growth and stability are only as good as they produce development and improvements in our people’s material condition.
Along these lines, the creation of wage employment is an excellent indicator. Which is why one of the first things I look for whenever the Kenya National Bureau of Standards releases its numbers is the trend on job creation.
For example, over the last 5 years, private sector jobs have increased by about 330,000. Public sector jobs have grown by 138,000. For a country of 55m souls, and over 24m in the labor market, we only have a sum total of 3.2m formal sector jobs.
The 468,000 formal sector jobs, over five years, can barely absorb the almost 1m young Kenyans who enter the labor force each year. For example, in 2024, the economy created just under 76,000 jobs. In the same year, the economy barely created 7,000 jobs in manufacturing.
Interestingly, construction jobs declined by 2,600, despite the current administration’s spirited hawking of the affordable housing project as a massive job creator (it appears that most of the jobs, if there are jobs being created, are in the informal sector). Most of the job growth in the formal sector came from services.
On actual incomes, only 12.4% of wage-earning Kenyans make more than 100,000 per month. The vast majority fall in the 30,000-49,999 (32.2%) and 50,000-99,999 (45.5%) range. These distributions have not budged much for the better part of five years.
Why should we care about jobs (including their quality and the security they give workers)? For many reasons. First, secure jobs support our households, in addition to being a source of dignity and purpose. Second, jobs create aggregate demand in the economy.
Wage earners buy things, and are therefore able to support other jobs in the economy. So one of the most important policy mechanisms for locking in faster future jobs should be to create as many secure and well-paying jobs in the private sector as possible.
Finally, wage earners pay taxes and save for retirement. Taxes fund public goods and services (when not stolen by government officials). Retirement savings, ideally, provide cash for capital formation and other investments in the economy.
All said, we should be obsessed with job creation. KNBS should be mandated to provide monthly data on job creation and job losses. We should have a policy research team in the ministry in charge of labor whose sole mandate is to figure out how to create and sustain good jobs for our people.
The fact that we have resigned to our low-job creation equilibrium and instead embraced informality is a travesty. We need to, and must be more ambitious than this. We need to aim for at least 1m formal sector jobs each year.
The writer is a professor at Georgetown University, US
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channel on WhatsApp
By Ken Opalo