World Data Lab – Kenya Insights Blog

This decade [2020 -2030] marks a golden period for Africa’s youth ages 15-35. According to World Data Lab projections, there will be over 130 million more youth, compared to the prior decade. By 2030 I) nearly one out of every four of the world’s youth population will be African; and II) Kenya alone will account for approximately 1% of the projected global youth population (2.4 billion) and 4% of Africa’s projected youth population (610 million). Establishing a clear understanding of these population dynamics, and their implications for socio-economic outcomes, is central to active and engaged policy discussions around youth employment in the country.

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10min read | March 2024

by World Data Lab

10min read

March 2024

by World Data Lab | 10min read | March 2024

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Figure 1: 10-year youth growth rates: Kenya, Africa and the rest of the world

Source: International Institute for Applied Systems Analysis (IIASA)

To help contextualize and inform these discussions granular, data-driven insights into the African youth population, and how it will change into the future, is key. The Africa Youth Employment Clock is a digital tool that offers such insights – specifically, it monitors real-time job growth and; forecasts employment trends for African youth through to 2030. For the first time, it brings together labor market statistics in a consistent, credible and comparable format for all of Africa, making it a unique tool to support evidence-based decision-making.

With the fastest-growing share of young people in the world, an important question becomes: What is needed to create the opportunities young women and men aspire to across diverse African countries and economies? In this article, we review labor market data from Kenya, drawn from the Africa Youth Employment Clock, and discuss how it helps to identify the critical issues around job opportunities for youth employment going forward.

A good starting point for considering where future jobs for young people may come from is to look at the existing employment composition, and this is especially useful in Kenya where youth already comprise 37% of the population. Indeed, the data suggest that Kenya has a better-than-average ability to absorb youth into employment, relative to other African countries and the rest of the world. Overall, 60% of Kenyan youth are currently employed, compared to 52% in the rest of Africa, and 48% in the rest of the world. This is coupled with a substantially lower share of the youth population who are not in employment, education, or training (NEET) – only 15% of Kenya’s youth population are classified as NEET, relative to rates of 26% and 23% for Africa and the rest of the world, respectively.

Figure 2: A breakdown of youth employment in Kenya

Notes: *Income defined according to World Bank (2024) international poverty lines. These poverty lines are as follows: International extreme poverty line = USD 2.15 per day (in 2017 PPP); Lower-Middle Income (LMI) poverty line = USD 3.65 per day (in 2017 PPP).

Source: WDL estimates based on International Labour Organisation (ILO) and IIASA data (2023)

That most young people are employed is promising, but what do we know about the different types of work they are engaged in?

Firstly, employment is predominantly informal, with 89% of youth working in the informal economy. This dominance of informal employment is present across all sectors in the country, ranging from a high of 97% informality rate in agricultural employment, to 79% informality in services. This puts the rate of informal employment in Kenya above the African average of 85%, and well above the world average of 60% (Bonnet, Vanek and Chen, 2018). Informal employment is more precarious than formal employment in that it is typically less well-paid, is likely to be more precarious, and have poorer working conditions relative to formal employment. It is also notable that in Kenya the share of young women and men in informal employment is equal, while formal employment has a substantially smaller share of women.

Secondly, it is clear that the dominant sector of employment in Kenya is services (see below table), which is where just over half (52%) of all youth are employed. Another 16% work in the Industrial sector, while the remaining 32% are employed in Agriculture. This composition closely mirrors global averages but differs considerably from most African countries, where a much smaller share of young people work in the services sector.

Finally, considering data on income, we find that despite relatively high levels of employment, approximately 55% of all employed Kenyan youth can be classified as earning below the World Bank’s Lower-Middle Income (LMI) poverty line – USD 3.65 per day (in 2017 PPP terms). Moreover, 27% of Kenyan youth are classified as living in extreme poverty as measured by the World Bank’s International Extreme Poverty Line, earning below USD 2.15 per day. This is suggestive of a relatively high degree of “working poverty’” among Kenya’s youth, which likely overlaps to some extent with the large share of youth employed in the informal economy. It is useful to note that these poverty lines are those defined by the World Bank to compare internationally, and they do not take into account national measures of poverty. Despite this caveat, however, the poverty figures are striking and underline the challenge to create higher-quality work for young people in Kenya, which provides higher, more reliable incomes.

Looking ahead to 2030, and based on existing growth trends, we expect to see youth employment increase by 1.5 million in total. However, to keep Kenya’s employment-to-population ratio constant at approximately 60%, 1.92 million net jobs would need to be created for youth by 2030. This suggests that employment opportunities in Kenya are growing more slowly than the youth population. We note though that if these additional “non-employed” individuals are being channeled into education, then this slightly slower growth in youth employment is not a major concern. Certainly what the data highlights then, is the importance of monitoring Kenya’s NEET rates carefully to ensure they do not begin to climb unsustainably.

Table 1: Growth in Kenyan youth employment, by sector

Source: WDL estimates based on ILO and IIASA data

The way that sectoral employment composition is projected to evolve is also useful to capture. We expect that of the 1.5 million new youth jobs, the vast majority of new employment opportunities, will be in the Services sector (68%), cementing the centrality of Services in youth employment, with some growth in industrial employment (37%), but importantly a marginal employment shift away from agriculture (-4.7%). The major sub-sectors contributing to employment growth include construction (34.3% of employment growth to 2030); education (14.3%); transport, storage and communication (12.5%); wholesale and retail trade, including the repair of motor vehicles (11.8%) and then a combination of other services (29.5%).

This trend of decreasing employment in Kenyan agriculture, with a corresponding increase in services employment, mirrors the modeled estimates of youth employment to 2030 for Africa. However, the concentration of youth employment in Kenya is different to what we see in Africa as a whole. By using extrapolated historical trends to 2030 data shows declining youth employment in agriculture across the broader African continent. The agriculture sector nevertheless remains the dominant source of youth employment for the African continent in 2030. In Kenya, on the other hand, the dominant employer for youth in 2030 will remain the services sector.

A final element of this compositional analysis of employment is understanding the gender and education profile of employed Kenyan youth. Specifically, knowing that most employment opportunities over the next 5 years will be concentrated in services can help to outline how this growth may align with goals of employment equity over time. For example, the services sector in Kenya has a slightly larger share of women – approximately 53% of youth in the sector are female. As a result, growth in this sector may support female economic participation over time. On the other hand, youth employment in the industrial sector is predominantly male (67%), and if this reflects certain barriers to entry for women it may require greater policy attention to ensure that women are afforded employment opportunities in this sector.

In terms of education, the Kenyan workforce has a relatively high share of formal education compared to the broader African continent – approximately 80% of all employed Kenyan youth have completed secondary education or higher. This level of educational attainment is promising from the perspective that it may allow Kenyan youth more employment opportunities in growing sub-sectors within Services where returns to education are likely to be much higher. However, it is critical that the education being offered to young people is well-aligned with changing sectoral skills requirements. Doing so effectively will enhance smooth transitions into the labor market, with fewer skill gaps or mismatches amongst new hires.

We conclude with some stylised facts that emerge from the data, which suggest that Kenya’s youth labor market can be helpfully characterized by three main factors:

Youth employment is concentrated in a large and growing Services sector, making up more than half of all current employment. This sector is expected to expand and include an increasing share of young workers as the population grows into the future.
The youth population in Kenya has a uniquely low proportion of NEETs compared to both the African continent and the rest of the world. Most young people are either in some form of education or are working. A concern then is around the quality of work and the extent of working poverty.
Employed youth are relatively well educated, with generally high levels of educational attainment relative to comparable countries on the continent. This suggests that there is a good foundation for shifts towards more productive, dignified work as the Kenyan economy continues to grow.

These stylized facts are relevant when considering the challenge of providing dignified and fulfilling work for young people in Kenya, and provide a baseline from which to better target the types of jobs that are created in the coming years, or where possible, enact relevant policy to ensure that the aspirations of young Kenyans are matched with employment opportunities.

This op-ed was produced in the context of the World Data Lab’s Youth Employment Clock in partnership with the Mastercard Foundation. The Africa Youth Employment Clock is a three-year initiative (2022 – 2025) that supports and informs the journey to more inclusive African labor markets through cutting edge data modeling and visualization. The views expressed do not necessarily represent those of the Foundation, its staff, or its Board of Directors.

References

Bonnet, F., Vanek, J. and Chen, M., 2018. Women and men in the informal economy: A statistical picture. Third edition. International Labour Office: Geneva. Available:

https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/publication/wcms_626831.pdf

World Bank, 2024. Poverty and Inequality. World Development Indicators. [Online]. Available:

https://datatopics.worldbank.org/world-development-indicators/themes/poverty-and-inequality.html

World Data Lab (In Partnership with the Mastercard Foundation). Africa Youth Employment Clock. (https://africayouthjobs.io/; accessed April 2024).

The articles were produced in the context of the Africa Youth Employment Clock in partnership with the Mastercard Foundation. The views expressed do not necessarily represent those of the Foundation, its staff, or its Board of Directors.