There will never be enough Jobs in the formal economy.

There will never be enough Jobs in the formal economy.

Unemployment in  Kenya.

The US Bureau of labour Statistics defines unemployed as a person who does not have a job and has been looking for employment in the past four weeks.

The young people in Africa are faced with a number of challenges. These include among others; their small-growing economies (but)which cannot create sufficient jobs for their citizens, political instabilities, Outbreaks, poor government policies, economic crisis, and post-crisis economic growth partly arising from unfavourable environmental conditions created and poor prices of the commodities that follow. Despite that, the African population continues to increase, implying that the number of youth increases proportionally and will continue to grow in the foreseeable future.

This population growth presents both an opportunity (to reap the demographic dividend) and imminent danger and threat to social cohesion. Consequently, if appropriate policies are not implemented to harness the dividend, massive migration occurs in search of better opportunities.

According to International Labour Organization (ILO), one (1) in five (5) youths was not in employment, education or training (NEET) in 2019 and they state that this state of joblessness has been steadily growing since 2012. This is projected to slightly increase by 0.3% points to 20.8 in 2021. And it seems to escalate even further due to the coronavirus disease outbreak. Young women are particularly more affected by the NEET status with a gender gap of around 10% points since 2018.

In sub-Saharan Africa, unemployment rates remain relatively low, as the majority of potential employees and active youth cannot afford not to work. However, these youth regularly suffer from under-employment and lack of decent working conditions. Of the 38.1 per cent estimated total working poor in sub-Saharan Africa, young people account for 23.5 per cent. Young girls tend to be more disadvantaged than young men in access to work opportunities and experience worse working conditions than their male counterparts, and employment in the informal economy or informal employment is the norm.

In the east African countries, Uganda has the lowest unemployment rate. This impressive score by Uganda is attributed to the fact that most young people have delved into agriculture hence bridging the gap between job opportunities in the formal and informal job sectors.

In Kenya, the unemployment rate keeps surging every year. According to a Business Daily post by Patrick Alushula dated February 24, 2020, more than 39% of Kenyan youth eligible for work remain unemployed. The situation has even been made worse by companies employing cost-cutting strategies through retrenchments and enhanced technology. On the other hand, institutions of higher learning incessantly churn out thousands of graduates each year, confounding the unemployment problem further.

Types of unemployment

Frictional Unemployment

This type of unemployment also called search unemployment occurs when workers lose their current job and are in the process of finding another. This can be as a result of voluntary quitting, seasonal employment, termination and contractual employment. There is, therefore, very little that can be done to reduce this type of unemployment other than providing information to reduce the search time. Since there will always be workers changing jobs, this shows that there is no way there can be zero unemployment.

Structural Unemployment

Structural unemployment is a form of involuntary unemployment caused by a mismatch between the skills that workers in an economy can offer and the skills needed by the employers. This results in a skills gap. In most case, this type of unemployment is caused by a technological takeover in businesses and organizations thus outdating the workers’ skills.

Cyclical Unemployment

This is caused by the contraction phase of the business cycle when the demands of the goods produced and services offered declines drastically. It forces the business to lay off a large number of workers to cut cost.

Also, because the laid-off workers have less money to maintain their buying and purchasing power, the demand for the goods and services decreases further, escalating the unemployment rate.

Government intervention, in the form of expansive monetary policies, is required to stop the downward spiral.

Classical Unemployment

Classical unemployment is caused when wages are too high. In this case, workers are too choosy and don’t accept lower wages. For example, in Kenya, fresh graduates demand too high. Again they are not ready to start with a menial job.

Seasonal Unemployment

This results from the fact that certain industries only produce or distribute their products at certain times of the year. Such industries include among others farming, tourism and construction.



Possible root causes of unemployment

There are various arguments about the causes of unemployment in Kenya, some of which are:

• Poor education system and training

Inadequate education and lack of productivity are costing jobs. Unemployment increases progressively with decreased educational levels, and the education system is not producing the skills for the labour market.
In Kenya, education curriculum has been theory-based (aimed at passing exams)and because of this most rolled out, graduates lack the practical skills in the areas trained for.

• Labor demand and supply mismatch.

Labour supply is affected by the increase in the number of job seekers over the years.
Furthermore, the Kenyan population is a young population – more people enter the working age as compared to the number of jobs that become available in the labour market.

• Role of trade unions in government.

Higher wage demands may lead to a decline in new employment. Some argue that labour demands make Kenya’s labour regime inflexible while others point to it as important to improve the quality of life through a living wage.

• Lack of interest for entrepreneurship.

Irrespective of various government initiatives to enhance entrepreneurship, entrepreneurial activity in Kenya is still very low. Self-employment is the solution to unemployment in Kenya because apart from being a source of income to the party involved, it ends up employing others.

 

These problems could be partly solved through the creation of part-time jobs. Such a plan would see skilled youths work in shifts in various institutions. For instance, a production company could employ two workers for the same job. One can then work for 5 hours, from 8 am to 1 pm; paving way for their colleague to work from 1 pm to 6 pm.

Part-time jobs can increase productivity among workers; spurring growth in an organization. Increased output is likely to fetch more revenues for such organizations making their operations more profitable. Demand for goods and services is also bound to increase among Kenyans as a result of improved purchasing power.

Part-timing will reduce poverty since a significant proportion of youths will be engaged in gainful employment. It has the potential to further reduce unemployment since those in the working class have more free time which they could utilize to implement their business ideas and employ other people.

 

However, as pointed earlier, research clearly points out that the labour supply outstrips demand. This means that there will never be enough jobs created in the formal economy to absorb unemployed people. And people should, therefore, be encouraged to start their own businesses- become entrepreneurs and ultimately self-employed.

But also, it is evident that there are perceptions about the causes of unemployment, and in particular, perceived stumbling blocks that have to be dispelled if we want to entrench a spirit of entrepreneurship in our country.
This is where communication has a big role and a big responsibility.

Communication is key.

Most Kenyan youths seem to be reluctant to start their own businesses. Any communication campaign will not succeed unless it simultaneously tackles such reluctance. To address this, an integrated campaign is crucial which should ideally focus on the following elements:

Firstly, a campaign at addressing the negative perceptions is needed which would encourage the entrepreneurial spirit among Kenyans and address feelings of hopelessness and perceptions regarding nepotism, corruption etc.

Secondly, there is an information gap where communication has a big role to play. The need for information on how to grow a business is extensive – for example, where and how to find starting capital; how to finance your business; how to market your business; how to attract new customers; how to run a business, the kind of skills needed; training opportunities; opportunities to gain experience and so on.

Lastly, job seekers should be encouraged to make the decision to be self-employed. The government should provide an effective and friendly environment that helps them persevere.

This requires a holistic approach for its success. The government needs to collaborate with all Socio-economic stakeholders. The current wage structures can be revised downwards to accommodate the new entrants in the job market. Additionally, the government can introduce tax holidays for start-up businesses and organizations and further reduce the corporate tax charges for the existing ones. In this way, companies will be cushioned against possible huge losses in their incomes on account of increased wage bills. With increased productivity, output, and profitability in the long run, such organizations are expected to stabilize and be in a better position to pay higher wages to their employees. Needless to say, the government will also be able to collect more tax revenues as a result of an expanded tax base.



COMMENTS (8)

  • comment-avatar
    Steve Juma 09/05/2020

    A nice piece,,,Youths especially graduates need to take a personal initiative of starting their own businesses rather than accusing the government for not offering jobs to them,,,

  • comment-avatar
    Lucy Ann 09/05/2020

    The article is very educative ,the level of unemployment in Kenya is alarming .it’s a concern that youths are not vast with the self employment idea and entrepreneurship. Promoting civil education on how to start business will help.The government can also help by providing capitals and reduce the restrictions on some of the funds available like youth funds,also provide some guidelines on getting licences for the business .This is a must read article for the youths.

  • comment-avatar

    Nice piece 👌

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