Hundreds of job seekers await clearance and interviews at KICC, Nairobi.
The Kenyan economy added the fewest jobs since the 2020 coronavirus pandemic as growth slowed, dealing a blow to the Kenya Kwanza administration’s push to ease the mounting youth unemployment.
About 782,300 new jobs were created last year, down from 848,100 new hires a year earlier, data released by the Kenya National Bureau of Statistics (KNBS) on Tuesday showed.
This emerged in a year when the economy also expanded at the slowest pace since the coronavirus pandemic at 4.7 per cent compared to 5.7 per cent a year earlier due to costly credit, floods that destroyed farms and disruptions following the deadly protests against the Finance Bill.
Salaried workers continued to feel the pinch of a slowing economy as real wages — gross salaries after accounting for inflation — fell for a fifth straight year, hurting employees’ disposable incomes.
Ninety per cent of jobs created in the year were from the informal sector mirroring difficulties of corporate Kenya creating quality employment for thousands of graduates leaving universities and colleges annually.
The economy created 75,000 formal jobs last year compared to 122, 900 — another low since Covid-19 economic hardships when 185, 800 jobs were lost in 2020.
Wage employment rose by 2.4 per cent to 3.21 million last year from 3.13 million prior as informal jobs rose faster by 4.2 per cent to 17.38 million from 16.68 million in 2023.
Total employment nevertheless crossed the 20 million mark for the first time to reach 20.77 million from 19.99 million previously.
Unpaid family workers
“The total new jobs generated in the economy were 782,300 in 2024, of which 78,600 were created in the modern sector reflecting a growth of 2.4 per cent,” KNBS indicated in the 2025 Economic Survey published on Tuesday.
“The total number of self-employed and unpaid family workers in the modern sector was estimated to have increased from 172,400 in 2023 to 175,500 in 2024. There was a slowdown in the number of new jobs created in the informal sector from 720,900 in 2023 to 703,700 jobs in 2024.”
The slower jobs growth was amid the tapering of GDP growth as the expansion of the economy softened to the lowest level since the pandemic when output contracted.
The lower output is partially a factor of softer agricultural production as food production witnessed mixed weather patterns.
“The agriculture, forestry and fishing sector expanded by 4.6 per cent in 2024, compared to a growth of 6.6 per cent in 2023,” KNBS added.
“The growth was largely a result of varied weather patterns during the year; with long rains being above average while short rains were below average, leading to mixed performance of the various crops.”
Other sectors had a mixed performance with manufacturing, for instance, growing by a faster rate of 2.8 per cent from 2.2 per cent in 2023, while finance and insurance activities had a slower 7.6 per cent growth rate from 10.1 per cent previously.
Across 2024, Kenyan firms slowed down the hiring of workers and froze pay rises, citing the reduced demand for goods and services amid biting cashflow problems.
Labour and Social Protection CS Alfred Mutua with job-seekers at KICC during a recruitment drive for jobs in Qatar.
Findings from Stanbic Bank Kenya purchasing managers index (PMI) in March 2024, for instance, showed that workforce numbers were at the slowest pace since the beginning of the year.
Economic activity was later disrupted around mid-year in June by street protests against the Finance Bill, 2024, which led to the partial closure of business premises and the temporary loss of jobs especially on casual roles.
Businesses endured a sustained hit on sales for most of 2024 on cash flow challenges that prompted firms to cut back on expenditures including staff costs, resulting in some job losses.
According to sales data from the Stanbic PMI, turnovers dropped in January, March, June, July and September.
“Firms noted that, despite lower inflation, a stronger shilling and increased marketing efforts, there was subdued consumer demand,” Christopher Legilisho, an economist at South Africa based Standard Bank said previously.
Consumers delayed spending decisions on non-essential goods and services resulting in the depressed circulation of money in the economy.
Higher deductions
The reduced purchasing power was further worsened by higher deductions to the National Social Security Fund (NSSF) and the Social Health Insurance Fund (SHIF).
Last week, the Federation of Kenya Employers (FKE) was stopped from moving proposals geared at revitalising business sustainability in the country at the Labour Day celebrations.
FKE was pushing for measures that would have not only improved the business environment, but also benefited workers.
“Beyond minimum wages, we have proposed broader reforms to improve worker welfare and support business sustainability. These include pegging statutory deductions to basic pay, revising tax relief bands from Sh24,000 to Sh36,000, reducing the housing levy to 0.5 per cent and zero-rating basic food items for VAT,” said FKE executive director Jacqueline Mugo in the blocked speech seen by the ‘Nation.’
FKE said the actions would ease the cost of living for Kenyans, increase their disposable income and make local businesses more competitive.
Job seekers fill out their credentials at the Kenyatta International Convention Centre on October 25, 2024, during a mass recruitment drive for various job opportunities in Qatari companies.
The employers also wanted clarity from the government on its support for local producers and manufacturers.
The lobby further criticised politicians for demanding that the youth create their own jobs, terming the call as dishonest and instead called for a conducive environment for businesses to thrive and create employment.
“They say the youths should be self-employed. The youths should be creators of jobs. The unfortunate thing is that all those who tell me this are employed and earning a salary,” Ms Mugo added.
KNBS has not published unemployment data since December 2022 when the unemployment rate stood at 4.9 per cent and affected mostly youths aged 20 to 29.
For the employed, wages have failed to keep up with the cost of living as salary increases trail the rate of inflation on average, leaving Kenyans struggling to maintain their lifestyles.
Real wage growth has been negative for five straight years since the pandemic with real average earnings falling by 0.3 per cent, albeit slower than the 4.1 per centage points real wage cut in 2023.
The real annual average earnings per employee decreased from Sh667,300 or Sh55,608 per month in 2023 to Sh665,400 or Sh55,450 per month in 2024. Real annual average earnings in the private sector were, however, higher in the period at Sh689,300 (Sh57,441 per month) compared to the public sector’s Sh614,300 (Sh51,191 per month).
