Policy Brief No. 1 of 2004 on Economic Growth Scenarios for Employment Creation in Kenya

Abstract

Employment creation in Kenya is a major concern to the government. The 1998/99 Labour Force Survey estimates Kenya’s active labour force at 10.5 million people, and unemployment at 14.6% of the active labour force. Given the weak economic performance between year 2000 and 2003, there is no doubt that the situation has deteriorated. Among the employed, the number of the working poor is high, comprising primarily of subsistence farmers, female-headed households and pastoralists. Underemployment is also a common phenomenon in the public sector. Faced with this problem, and in the middle of a worsening poverty situation, the overriding challenge for the country is to create employment for the growing labour force. The study explores different policy options that the Government can pursue to generate 500,000 new jobs annually. The scenarios have been developed using the KIPPRA- Treasury Macro Model (KTMM), a macro-model of the Kenyan economy. The model is used to provide medium term projections of major macroeconomic variables in a consistent framework.