East Africa’s largest economy, Kenya, holds the dubious distinction of having the region’s highest unemployment rate, the United Nations says in its latest assessment of human development that throws a huge policy-making challenge at Nairobi.
The 2017 Human Development Index (HDI) shows that Kenya’s rate of unemployment is now equal to those of neighbouring Ethiopia and Rwanda combined, highlighting the paradox of economic policies that have sustained growth without generating jobs — culminating to poor distribution of the benefits of growth.
The United Nations Development Programme (UNDP) report says that nearly four in every 10 Kenyans of working age have no jobs — the worst level of unemployment in the region.
The report says 39.1 per cent of the Kenyan population of working age are unemployed compared to Tanzania’s 24 per cent, Ethiopia’s 21.6 per cent, Uganda’s 18.1 per cent and Rwanda’s 17.1 per cent.
The UN agency warns that soaring unemployment in the region, especially in Kenya, risks breeding runaway crime and violence.
“While Kenya has shown progress in promotion of human development — in improving access to education, health and sanitation, with more people rising out of extreme poverty — several groups remain disadvantaged,” the UN says in the report that was released Tuesday.
Highest dependency ratio
Mass joblessness is a drag on the economy because it forces unemployed adults to depend on the small number of working relatives and stretches family resources, making it difficult for them to save or invest.
The high level of unemployment has also left Kenya with one of the highest dependency ratios in the world at 75.4 per cent arising from the large number of youths (children under 15 years) in every family.
Most importantly, the country’s income inequality level of 33.1 per cent, which is only second to Rwanda’s, means wealth is held by a few, making it the main driver of runaway unemployment.
Kenya’s unemployment crisis has also been blamed on sluggish growth of formal sector jobs even as the country continues to produce thousands of university graduates every year.
As a result, the country’s economy is missing out on the labour dividend it should be reaping from the bulge in its youthful population in terms of foregone productivity, innovation and consumer market growth.
The report shows Kenya’s labour market has deteriorated from 2011 when unemployment touched a low of 24.1 per cent, with 75.9 per cent of the population aged 25 years and above having been found to have had jobs.
The UN now says the number of job holders has dropped to 60.9 per cent.
This state of affairs has the potential to slow down the efforts to eradicate extreme poverty and improve peoples’ welfare as part of the UN’s sustainable development goals (SDGs).
The report, however, has some good news for Kenya; the population living below the income poverty line of $1.90 a day now stands at 33.6 per cent from 45.9 per cent in 2012.
The UN recommends increased investment in high-quality education and youth training programmes to boost entrepreneurship among the youth.
The latest UN findings are in line with the World Bank’s report last year that East Africa’s largest economy holds the dubious distinction of having the largest number of unemployed youth in the region.
Unemployment among Kenya’s youth is estimated to stand at 17.6 per cent compared to 6.3 per cent for Tanzania, Uganda (six per cent) and 7.6 per cent for Ethiopia.
Rwanda was found to have the lowest number of unemployed youth at three per cent.
Kenya’s joblessness among the youth has also been fanned by the view among companies that fresh graduates lack the specialised skills and experience needed to perform tasks.
Labour squeeze despite economic growth
It has not helped that the Kenyan economy last year lost its job creation momentum for the first time in four years, having churned 832,900 new formal and informal sector jobs compared to 841,600 a year earlier.
The labour market squeeze came despite the economy growing at a robust rate of 5.8 per cent compared to 5.7 per cent in 2015.
Out of the 832,900 new jobs, only 85,600 were formal, accounting for a paltry 10.2 per cent, which continues a long-running trend where the informal sector accounts for the bulk of new jobs.
The slowdown has been blamed on a tough economic climate that saw hundreds of formal sector workers lose jobs in retrenchments.
The HDI is a measure of a country’s socio-economic wellbeing based on three parameters — a long and healthy life, education and standards of living.
Kenya is ranked position 146 out of 188 nations globally on the human development score, ahead of Tanzania (151), Uganda (163) and Ethiopia’s 174.