Nearly 740,000 Kenyans lost their jobs last year as the Covid-19 pandemic hit households, the 2021 Economic Survey report shows.
The report, released by Treasury Cabinet Secretary Ukur Yatani Thursday, reveals for the first time the extent of damage the virus wreaked on many sectors of the country’s economy.
Overall Gross Domestic Product (GDP) shrunk by 0.3 per cent, implying a smaller national cake to share out for the more than 50 million Kenyans despite a rise in the cost of living as captured by the 5.4 per cent average annual inflation rate.
“Confirmation of the existence of the disease necessitated taking drastic measures by the government to curb its spread and minimise the risk of infections at workplaces,” the report says.
“Consequently, cessation of movement in and out of some regions, closure of businesses with high exposure and reduction of business operating hours due to curfew, adversely affected employment.”
The economy had recorded a five per cent growth in 2019.
Tourism took the hardest blow as shutdowns and travel restrictions saw total earnings from the sector slump 43.9 per cent to Sh91.7 billion, taking with it thousands of jobs.
Construction, however, defied the pandemic, recording an 11.8 per cent growth compared to 5.6 per cent expansion in 2019.
The contraction of the annual GDP estimate coincided with the rebasing of the economy, neutralising the net effect of the shrinkage on the actual size of Kenya’s economy.
The revision expanded the size of the economy by nearly Sh500 billion to Sh10.753 trillion in 2020, compared to Sh10.256 trillion in 2019.
Pain of the pandemic
Rebasing, however, could still not mask the actual cost and pain of the pandemic on jobs as hundreds of thousands of Kenyans were retrenched across all cadres from the formal to Jua Kali.
The survey was released after a four-month delay attributed to late submission of data by key economic sectors, which, in turn, blamed Covid-19 disruptions.
It paints a better performance on many other metrics of the economy compared to what other agencies, including the World Bank and the Kenya National Bureau of Statistics (KNBS), had given in their preliminary reports.
The survey, prepared by the KNBS, shows that total employment outside small-scale agriculture and pastoralism shrunk by 4.1 per cent to 17.4 million.
This translates to 737,000 jobs lost in the pandemic year from the 18.1 million Kenyans that were employed in 2019.
A breakdown of the numbers shows that 187,000 modern jobs were lost in the year companies and other establishments dismissed workers to stay afloat.
Private sector jobs
The total share of private sector employment declined to 67.7 per cent in 2020, compared to 70.5 per cent the previous year.
In total, the private sector cut 10 per cent of wage employment from two million jobs to 1.87 million in 2020, mainly attributed to the pandemic.
This resulted to a decrease in the private sector wage bill from Sh1.6 trillion to Sh1.5 trillion.
The informal sector was not spared the cuts, losing nearly half a million jobs from 15 million to 14.5 million in the period under review.
But as more and more Kenyans lose their jobs, the government is increasing its expenditure projections, in what could see it squeeze more tax from fewer workers.
The survey shows the government expenditure is expected to surge by 16 per cent, from Sh2.94 trillion in the 2019/20 to Sh3.4 trillion in the 2020/21 financial years.
Recurrent and development expenditure are expected to grow by 21.8 per cent and 11.5 per cent to Sh2.7 trillion and Sh678 billion, respectively.
Industries that accounted for the highest wage employment in the private sector in 2020 were manufacturing, agriculture, forestry and fishing, wholesale and retail and motor vehicle repair.
The report shows that 83 per cent of recorded employment in 2020 was in the informal sector.
“The contraction was spread across all sectors of the economy but was more dismal in accommodation and food serving, education, professional and administrative service,” Mr Yatani said.
According to the survey, accommodation and food service bore the brunt of the impact of the pandemic as the sector shed off 38.7 per cent of its workers from 81,200 in 2019 to 49,800 in 2020.
But it was not gloom for all sectors of the economy.
Construction, agriculture, forestry and fishing were more vibrant in 2020 despite contraction in global demand.
Agriculture recorded a growth of 4.6 per cent mainly driven by tea and sugarcane farming.
“This was mainly as a result of increased production of tea and food crops such as beans, rice, sorghum and millet,” the CS said.
Manufacturing slowed to 0.2 per cent, compared to 2.8 per cent in 2019.
Aggregate maize production declined by 4.3 per cent from 44 million bags in 2019 to 42.1 million.
“Despite most sectors recording contraction, the economy was somewhat supported by accelerated growth in agricultural production (4.8 per cent), construction (11.8 per cent), finance and insurance (5.6 per cent) and health services (6.7 per cent),” the survey says.
Mr Yatani said there is need to balance timeliness of the report and accuracy.
KNBS releases the crucial annual data in April.
This year, the statistical agency announced that it would delay in publishing the data due to coronavirus-related challenges.