Discussion Paper No. 300 of 2023 on Analyzing Structural Heterogeneity of Informal Sector Employment in Kenya

Abstract

The informal sector accounts for 83 per cent of the total employment in Kenya. This study sought to understand duality and its driving factors to inform policy on enhancing decent work in the informal sector in Kenya. Using a multinomial logit analysis, the study established that workers are motivated to engage in more than one job in the informal sector due to its structure, to get more earnings and to meet the standard of living. Indeed, employees with low skills, less income and those residing in rural areas are likely to have two jobs in the informal sector. Further, workers in formal full time employment are less likely to engage in duality compared to their counterparts who have no employment contract. Women and youth are more likely than men to work on multiple jobs in the informal sector. The key recommendations include implementation of policies and strategies to improve terms of employment in the informal sector; sensitization of workers and employers and development of regulations to foster participation of informal sector workers in trade unions; and improve access to post-skills training, in service training, recognition and certification of prior learning and apprenticeship among informal sector workers. It is also important to increase job creation in the formal sector; and improve official data, statistics, and documentation of informal sector. It is important that the government, with support from the private sector, improves the productivity of the informal sector with a well-balanced mix of economic and social policies that will make a remarkable contribution to enhancing quality of informal sector jobs. There is also need for policies that will protect women against social risks and vulnerabilities, such as unemployment, potential lay-off during maternity, old age, and ill health. There is need for the government with support from stakeholders to create more innovative opportunities and give incentives to private providers of employment services while improving the quality of jobs in the informal sector.