Around half of the major sectors in Kenya are still grappling with the impact of the Covid-19 pandemic, struggling to regain the jobs that were lost, according to an analysis of employment data. This situation is causing concern among the country’s skilled youth who are hoping to enter the job market.
Based on the latest official distribution of wage employment in private firms, eight out of the 18 key sectors have not yet returned to their pre-pandemic employment levels. Employers are also warning of additional challenges due to rising labor costs.
The Federation of Kenya Employers (FKE) has identified several factors contributing to the slow creation of decent job opportunities and increased business operation costs in the post-Covid period. These include stubbornly high inflation, a weakened currency, and new taxation measures.
Data from the Kenya National Bureau of Statistics indicates that it took the private sector two years to recover the 205,200 formal jobs lost during the pandemic. However, not all sectors have fully rebounded to their pre-pandemic employment levels.
According to Jacqueline Mugo, the executive director of FKE, inflation has been rising in Kenya, leading to increased business costs, a high cost of living, and higher interest rates. She attributes this price growth to a combination of local, regional, and global factors, such as climate change, prolonged drought, food insecurity, high energy costs, and adverse global geopolitical actions.
The transport and storage sector has yet to recover the largest number of lost jobs, followed by the accommodation and food service sector, mining and quarrying, and electricity, gas, and air conditioning supply services. These sectors are respectively 10.96%, 6.53%, 5.92%, and 3.77% short of their 2019 employment levels.
Other sectors that have not fully returned to their 2019 employment levels include wholesale and retail trade and private education facilities.
In contrast, sectors such as information and communication, financial services, construction, water supply and waste management, and professional services have experienced a full rebound in private sector jobs.
Employers are concerned that the recent introduction of new revenue-raising measures, set to take effect in July, could threaten the full recovery. These measures include a 1.5% housing levy, proposed increases in National Health Insurance Fund (NHIF) deductions and contributions to the National Social Security Fund (NSSF), and a doubling of value-added tax on fuel. These additional costs are expected to impact labor expenses and slow down the creation of new job opportunities.
Antony Mwangi, the CEO of the Kenya Association of Manufacturers, has warned that the cumulative effect of these measures could increase employee costs by as much as 5%. This may lead companies to adjust their workforce, potentially reducing employment numbers.
