A Depressed Economy? Employment Opportunities in Kenya Shrink as Wages Fall
Kenya’s economic engine is grinding slower, with fewer jobs being created and wages stagnating or falling in many sectors. The recently released 2025 Economic Survey by the Kenya National Bureau of Statistics (KNBS) paints a sobering picture of a workforce squeezed by inflation, dwindling job prospects, and declining purchasing power.
Youth Unemployment and Shrinking Opportunities
The World Bank pegged Kenya’s youth unemployment rate at 5.7% in 2024. However, with over a million young people joining the labor market annually—many without specific skills or training—the Federation of Kenya Employers (FKE) notes that youth still bear the brunt of unemployment.
The Kenya Kwanza administration has introduced various initiatives to counter the trend, such as youth and women enterprise funding, skills development programs, and overseas job placements. Yet, these measures have not stemmed the tide of joblessness.
Sluggish Growth Amid Regional Competition
Kenya’s real GDP grew by 4.7% in 2024, down from a previously forecasted 5.7%. This is against 5.4% growth in the East African Community and 3.8% in Sub-Saharan Africa. Globally, real GDP rose by 3.2% in the same period.
Despite a drop in inflation to 4.5%—the lowest in five years—the economic momentum appears lopsided. Sectors such as agriculture and real estate posted modest growth, while others like construction and mining contracted.
Sectors in Decline
The construction sector, despite President William Ruto’s optimism around affordable housing, contracted by 0.7% in 2024. Reduced access to credit and a 7.2% drop in cement consumption point to broader stagnation. Similarly, the mining and quarrying sector shrank by 9.2%, adding to the drag on economic growth.
In contrast, the manufacturing sector showed signs of life, growing by 4.4% thanks to a rebound in agro-industries, especially sugar production. Yet, this growth has not translated into significant employment gains.
Jobs Created—But Mostly Informal
Kenya created 782,300 new jobs in 2024. However, 90% of these were in the informal sector, which is often characterized by low wages, job insecurity, and lack of social protection. Formal sector jobs grew by a mere 2.4%, accounting for 78,600 positions.
Employment in the construction sector fell slightly from 226,300 workers in 2023 to 223,400 in 2024. Meanwhile, the number of public construction workers edged up marginally.
Falling Wages and Rising Costs
Real wages have been on a downward slide for five consecutive years. In agriculture, the average wage per employee fell from Ksh. 347,598 in 2020 to Ksh. 300,081 in 2024. Other sectors, including manufacturing and retail, mirrored this trend, weakening consumer purchasing power.
This erosion of income is worsened by increased statutory deductions for the National Social Security Fund (NSSF) and the Social Health Insurance Fund (SHIF). Many Kenyans now complain of being unable to access healthcare services despite contributing to SHIF, forcing them to dig into their pockets during emergencies.
Manufacturing’s Fragile Comeback
Although the government aims to boost manufacturing to 15% of GDP by 2027, progress remains mostly on paper. Industries such as apparel—which benefit from AGOA, a U.S. trade deal—may face new threats as global trade dynamics shift.
With AGOA expiring soon and the U.S. demanding stricter trade terms, Kenya risks losing access to its biggest export market. The potential collapse of the apparel sector could throw thousands into joblessness, further deepening the employment crisis.
Conclusion
Kenya’s economy remains resilient on paper, but for many citizens, the reality is far less encouraging. Rising job insecurity, falling wages, and a fragile manufacturing base reflect a labor market under strain. As global trade shifts and domestic challenges mount, the government must move beyond policy promises and implement tangible solutions to rescue its workforce from a deepening economic malaise.
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A Depressed Economy? Employment Opportunities in Kenya Shrink as Wages Fall