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Kenya Business News

Private sector jobs dip as growth declines to 4.4 pc

By GEOFFREY IRUNGUBusiness Daily

The private sector lost its jobs creation momentum last year as economic growth decelerated for the first time since the 2008 post-election crisis dip, official data released on Tuesday indicates.

Though it maintained its position as the second largest source of new jobs, a drastic drop in the growth of agriculture output capped the private sectors ability to create new jobs at 47,000 or 3.4 per cent compared to 56,000 the previous year reflecting 2011’s slowdown in the pace of economic activity to 4.4 per cent from 5.8 per cent the previous year.

Economic Survey 2012, whose result Planning minister Wycliffe Oparanya released on Tuesday indicate that the decline in agriculture’s output growth to 1.5 per cent from 6.4 per cent the previous year was the single largest contributor to the private sector’s inability to create employment.

Agriculture remains the single largest contributor (24 per cent) to Kenya’s total annual output or gross domestic product (GDP), whose performance is tightly linked with the overall performance of the economy.

At 4.4 per cent, Kenya’s economic growth stands at below half the 10 per cent target that the country needs to achieve and sustain in the next 18 years to realise the goal of becoming a middle income state by the year 2030.

Official data that Mr Oparanya released indicates that the government created 21,000 new jobs taking the formal sector’s tally to 68,000 out of the total 520,100 new jobs that the economy generated last year.

That means the informal sector, mainly made up of micro-enterprises, retained its position as the leading source of new employment having generated more than 85 per cent of the new jobs last year -4.7 percentage points more than the previous year.

More than 700,000 high school and college graduates enter the labour market every year and the creation of 520,100 jobs means the ranks of the jobless rose by more than 200,000 deepening the Kenya’s bourgeoning unemployment crisis.

Unemployment, especially among the youth, estimated at 35 per cent, tops the list of Kenya’s leading social and economic challenges that has also been described as a time-bomb waiting to explode.

Last year, the building and construction industry – mainly associated with the mega infrastructure and housing projects – was the biggest contributor to employment creation having grown by 9.5 per cent.

The total value of reported private buildings works completed in selected towns rose by 12.4 per cent to stand at Sh43 billion in 2011 opening thousands of new temporary jobs that helped cut down overall unemployment in the country.

Cement consumption, a key indicator of the performance of building and construction sector, increased by 10.6 per cent to 3.1 million tonnes as credit, the main driver of activity in the sector, rose by 56 per cent to Sh50.8 billion, the survey said.

The robust growth in public sector employment is linked to recruitment of thousands of teachers, police officers and other civil servants.

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