Discussion Paper No.216 of 2018 on Labour Demand in Kenya: Sectoral Analysis

Abstract

At the core of job creation in an economy is the ability of every sector of the economy (both formal and informal) to grow optimally and create adequate decent jobs for the working population. This study sought to determine the labour demand across various sectors of the economy at both the aggregate and activity level based on their ability to create jobs, the frontier products that Kenya has potential to create value addition for more job opportunities, and targeted programmes that the government plans to implement. The focus of analysis was on manufacturing, the blue economy, and construction and the five activities of the informal sector. The study used time series data from KNBS spanning the period 2000-2016. Using descriptive statistics, the study finds that wholesale and retail trade, and manufacturing are the key employers, accounting for 80 per cent of total employment in 2016. Employment in the formal sect0r is dominated by education (20%), agriculture (14%), manufacturing (12%) wholesale and retail trade (10%), public administration (9%) and construction (9%). In the formal sector by employment numbers, the leading activities in the agriculture sub-sectors are coffee, tea, sugar and mixed farming. Employment in the wholesale and retail trade is mainly through wholesale trade of agricultural raw materials, maintenance and repair of motor vehicles, retail sale through stalls and retail sale of automotive fuel. For the manufacturing sector, of which 68 per cent of the total employment is agro-processing, the leading employing activities are: wearing apparel made up of textile articles, manufacture of food products, vegetable and animal fat and sugar.