Better wages attract more workers to the services sector
Almost half of Kenya’s working population is in the service sector amid a shift from agriculture due to declining wages and salaries.
A World Bank report shows the share of Kenyans employed in the service sector rose by eight per cent to 42 per cent in the four years to 2019, as jobs in farming stagnated at 47 per cent.
This is on the back of a jump in the monthly average wage in the services sectors such as accommodation and food, technology and financial segments.
“Growth and structural transformation allowed many Kenyans to transition out of agriculture during 2005- 2019, but this transformation has since stalled and remains uneven,” said World Bank in the Country Partnership Framework (CPF) report.
“During 2005-2015, the share of employment in agriculture declined from 58 to 47 per cent (from 70 to 45 per cent in the Central region) but then stagnated at 47 per cent during 2016-2019.”
The report says much of this employment in the services is, however, in the informal sector which captures 89 per cent of net employment growth, outside of small-scale farming and pastoral activities.
Economic activities diversification, local and foreign investment and persistent drought hurting agricultural production have seen a transition from farming and livestock farming.
The sector, however, still remains the biggest employer in the country with more than 70 per cent of Kenya’s rural people.
Data from Economic Survey 2022 show the total number of workers in the agriculture sector marginally increased by 1.54 per cent to about 337,200 from 332,100 in 2017.
Jobs created under information and communication grew by 7.8 per cent to 134,000 over the five-year period, while wages grew by 24.9 per cent to Sh87,167.
Kenyans employed in the accommodation sector however dropped by 20.6 per cent to 63,400 in 2021 from 79,800 in 2017, being the worst industry hit by the pandemic due to shutdown restrictions in 2020 and 2021 over safety concerns.
However, its monthly average wage under agriculture increased by 46 per cent over the period to Sh121,884 from Sh83,482.
The monthly average wages under agriculture still remain below these sectors at Sh37,196 in 2021 after a 23.2 per cent growth from 2017.
In Kenya, income rose at a faster pace last year as businesses reopened or resumed full activity after the contraction in 2020 when Covid-19 containment measures restricted economic activity and slashed hundreds of thousands of jobs.
Income distribution follows the same trend, with the best-paying jobs found in sectors that are primarily found in urban centres.
Word Bank report shows wage employment remains concentrated in urban areas – 59 per cent versus 18 per cent in rural areas, while for women it is almost half the share of men, highlighting the shrinkage in the agriculture sector.
The Financial Access (FinAccess) Household survey found that employees in the NGO and international organisations sector took home the highest monthly average wage of Sh313,084 last year, nearly double that of the second-best-paying sector.
The financial services sector—comprising banks, insurance firms and investment companies— was the second-highest paying with an average monthly pay packet of Sh173,506, followed by energy supply at Sh173,104 per month.
Others offering workers an average wage above Sh100,000 per month were administrative and support service activities (Sh144,539), transportation and storage (Sh128,011) and professional, scientific and technical activities at Sh123,223.