Kenya’s rapidly expanding workforce isn’t finding jobs fast enough, according to a new World Bank report. “Unemployment and underemployment are rampant, especially among the youth,” the bank said.
Put simply, job growth isn’t keeping up with economic growth in Kenya—if it was, East Africa’s largest economy would have created 150,000 more jobs than it did in the five years to 2013. Even so, this would have covered only half of the gap between the growth in jobs and the working-age population over that time.
Between now and 2030, Kenya’s working-age population will grow by nearly 14 million people, to around 39 million. Without a stronger labor market, the country’s already high youth unemployment rate could get worse.
The government has pledged to create 570,000 new jobs in the formal sector between 2015 and 2017, which implies a quadrupling of the pace of job creation in 2013. To do this, policies need to promote faster growth in the formal economy—which is highly productive but not very big—as well as encourage workers in the large, less productive informal economy to transition into more formal employment. Kenya’s underground economy is vibrant, but establishments tend to stay small, with owners avoiding “cumbersome registration procedures” and other regulations that come from operating officially, the World Bank notes.
The two major problems, the bank says, are that too many workdays are lost to labor disputes and the country’s minimum wage may be pushing people into the informal sector. Kenya’s minimum wage, both in absolute terms and relative to worker productivity, is much higher than countries at a similar stage of development.
The World Bank has called Kenya’s aspirations of becoming an upper-middle-income country—a group that includes Mexico, Turkey, Thailand, and South Africa—by 2030 “farfetched.” Its underachieving labor market is a major reason why.