Labour Day reality check: Is Kenya’s 5% unemployment rate hiding deeper jobs crisis?
By Ndiritu Wanjiru, May 1, 2026As Kenya observes Labour Day, a day dedicated to celebrating workers and the labour market, the nation’s recent labour market figures paint a far different picture than the joy of celebration.
On the face of it, Kenya remains a country with a comparatively low unemployment rate and consistent job growth. But the nature of these jobs paints a grim picture.
A ‘jobless nation’ in disguise
The most recent Kenya National Bureau of Statistics (KNBS) Economic Survey shows a total of 882,100 new jobs were created in 2025. However, over 716,800 of these (more than 80%) were in informal employment.
This lifted informal employment to some 18.1 million people, while formal wage employment only increased slightly to some 3.3 million. These figures suggest that the economy is creating jobs, but mostly of poor quality and little security.
The official unemployment rate (commonly said to be 5 per cent) seems to indicate relative labour market stability. But this rate is influenced by the statistical methodology adopted by KNBS, in which any activity that generates income is classified as employment. This means a casual worker, street vendor or gig economy worker with an unstable source of income is considered employed on par with a formal worker.
This approach skews the official unemployment figure down, while concealing the bigger problem. According to KNBS data, only 16.4 per cent of the total workforce is in the formal sector, so most people are in informal work with no formal contract or benefits and precarious income. So, the problem is not just unemployment, but also underemployment and working poverty.
Ruto’s jobs promise in the spotlight
Employment has been the focus of President William Ruto’s economic policy, and his administration has often used increasing employment figures to demonstrate the success of the Bottom-Up Economic Transformation (BET) plan.
Yes, jobs are being created – at least according to KNBS statistics. But it also raises questions about their quality. Given that the bulk of new jobs are in the informal sector, the argument arises that the government is increasingly counting the number of income-generating activities as the yardstick for measuring success rather than the creation of productive and dignified jobs.
This disconnect between rhetoric and reality is particularly important on Labour Day, when the dignity of work is being celebrated.
Growth without jobs
In 2025, KNBS estimated that Kenya had a gross domestic product (GDP) growth of around 4.6 per cent. However, this has been accompanied by a corresponding decrease in the number of formal jobs.
Rather, the bulk of new employment has been in services, agriculture and informal trade – industries that are low-productivity and low-paid. At the same time, hundreds of thousands of young people flow into the workforce each year, but the economy seems unable to provide them with meaningful jobs.
This mismatch reflects an underlying structural mismatch: there is growth, but it isn’t labour-intensive enough to create decent jobs on a large scale.
An examination of sectoral data from the KNBS shows Kenya’s industrial sector remains weak. The manufacturing sector remains a relatively small contributor to overall employment, resulting in a lack of high-quality jobs.
This is a concern because industrialisation has always been the key to mass employment in developing countries. Yet, in Kenya, the prevalence of low-productive sectors means that even with strong economic growth, the economy is not expanding fast enough to create enough quality jobs for the growing workforce.
Without more industrialisation, the employment structure is likely to continue to be skewed towards the informal sector.
The limits of the ‘hustler economy’
The government’s emphasis on micro, small and medium enterprises, dubbed the “hustler economy”, is in line with KNBS data showing that the informal sector continues to be the main source of employment.
But the data also reveals the shortcomings of this approach. The majority of these informal enterprises are in crowded markets, with low margins and little room for growth. This means that while they offer jobs, they don’t necessarily offer decent, or “decent”, jobs.
This begs the question: is existing policy changing the structure of the economy or formalising survivalist activity?
Crisis beyond numbers
On this Labour Day, the KNBS Economic Survey offers a puzzle. We are definitely generating employment and the jobless rate is comparatively low. But the quality of jobs is starkly deficient.
It is not just the quantity of work that matters, but the quality of work – and its ability to provide dignity, security and economic opportunity.
The verdict is in the data. The problem is not a lack of jobs but a lack of decent jobs in Kenya. While the numbers might show improvement, the reality for many workers is still informality and insecurity.
This Labour Day is a tale of two extremes: we are celebrating workers at a time when our economy is not yet delivering the work that will lift them up.