Kenya’s job market generated a net gain of at least 848,200 new jobs in 2023, according to the Kenya Economic Survey 2024.
However, the composition of this growth, persistent gender disparity, and declining real wages raise concerns about the long-term sustainability of this progress.
Informal Sector Leads Growth
The informal sector contributed 85% of new jobs created equal to 720,900. However, the formal wage employment saw a modest increase of 122,800 jobs (4.1% growth).
On the other hand, public sector wage employment grew by 5.9%, with the largest increase going to teachers at 6.5%.
Private sector wage employment grew by 8.2% with the Public sector wages now accounting for nearly 30% of the total wage bill.
Average Wages Rise, But Real Wages Decline
Overall nominal annual average earnings increased by 3.4%. However, the Consumer Price Index (CPI) at 7.7% eroded this gain, resulting in a 4.1% decrease in real wages (adjusted for inflation). This decline was more pronounced in the public sector (7.8% decrease).
“Overall, the nominal wage bill rose by 7.0 per cent from KSh 2,607.6 billion in 2022 to KSh 2,789.3 billion in 2023. Nominal average earnings in the modern sector per person increased from KSh 864,750.1 per annum in 2022 to KSh 888,743.5 per annum in 2023. The annual inflation rate as measured by the Consumer Price Index (CPI) stood at 7.7 per cent in 2023,” reads the KNBS survey.
Consequently, analysts point to the introduction of new taxes and rising social security costs as potential contributors to the decline in real wages.
Gender Gap Remains a Challenge
The unemployment rate for women in Kenya is twice that of men. 40.3% of women reported being unemployed in the past year, compared to only 18.5% of men according to the KNBS data.
Youth unemployment remains a growing concern, with over half of unemployed Kenyans aged 20-29.
Women, particularly those with lower levels of education, face significantly higher long-term unemployment rates compared to men.
The data showed that the long-term unemployment rate for women is significantly higher, reaching 63.6% for those without formal education, in contrast to the 18.7% reported for men in a similar educational bracket.
The dominance of the informal sector highlights the need for policies that encourage formalisation and job creation in this segment.
In addition, the gender gap in employment requires targeted initiatives to improve access to opportunities for women.
Similarly, balancing wage growth with fiscal needs to avoid further erosion of real wages is a key challenge for policymakers.
