Kenya witnessed the creation of at least 848,200 new jobs in 2023, even amidst a challenging economic environment where many firms opted for retrenchment to reduce operational costs. The Kenya Economic Survey 2024, released by the Kenya National Bureau of Statistics (KNBS), reveals that the informal sector was a significant contributor, accounting for 720,900 of these jobs, which is 85% of the total.
The report shows a positive trend in employment, with the total number of jobs in the modern and informal sectors, excluding small-scale farming and pastoralist activities, rising from 19.1 million in 2022 to 20 million in 2023. Notably, wage employment in the modern sector saw a 4.1% increase, translating to 122,800 new jobs, while the public sector experienced a notable growth of 5.9% in wage employment compared to 1.6% in the previous year.
The nominal wage bill for 2023 rose by 7.3% to Sh2.86 trillion, with the private sector wage bill increasing by 8.2% to Sh1.96 trillion. The public sector wage bill also saw a 5.3% rise, representing 29.8% of the total wage payments. Teachers received the largest share of the public sector wage bill at Sh285 billion, a 6.5% increase from the previous year, accounting for 34.2% of the total public sector wage bill.
Despite the overall increase in employment, real annual average earnings per employee decreased by 4.1% to Sh667,300, or Sh55,608 per month. In the private sector, real annual average earnings per employee declined by 2.5% to Sh686,400 (Sh57,200 per month), while the public sector saw a 7.8% decrease to Sh625,900 (Sh52,158 per month). Experts attribute the decline in salaries to high tax regimes, including a new housing levy and increased social protection and national health cover charges.
Inflation remained stable in 2023, maintaining an average annual rate of 7.7% as measured by the Consumer Price Index (CPI). This was driven by increased prices in key areas such as transport (12.2%), food and non-alcoholic beverages (9.7%), and housing, water, electricity, gas, and other fuels (8.1%).
These developments highlight Kenya’s resilience and ability to generate employment even in tough economic conditions. The focus on the informal sector and significant wage bill increases underscore the country’s commitment to economic growth and stability. However, the decline in real wages and the impact of high taxes on disposable incomes present challenges that need to be addressed to sustain this positive trend.
