Job losses are only one half of the employment story

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

11 Aug 2019

Recent media reports on job losses in Kenya have caused a bit of a scare in the public, especially in social media. It appears as though, everywhere you look, companies are closing down – left, right and centre.

But looking at the number of lay-offs alone is like going to the mortuaries, counting the number of dead bodies being brought in each day and concluding that the population is under threat of extinction. This is just one side of the story.

To get a better picture, you would need to go the maternity hospitals and count the number of babies being born every day. You will most likely find that there are more births than deaths. Thus, the proper conclusion is that the population is growing; not diminishing.

But that’s not all; the population is also determined by the average lifespan of a person. Over the past 100 years, the worldwide average number of births per woman has dropped from about 6 babies to about 2.5 babies.

That is, fewer babies are coming into the world yet the total of people has been increasing. The reason is that people are living longer than they used to and so there are fewer deaths. It turns out that the widely held belief that our ancestors lived longer than we do is false.

The lesson here is that we cannot conclude that jobs are diminishing by simply looking at the number of lay-offs. We must also include new jobs being created. The challenge of job creation data is that it comes through slowly and it is not exciting, hence it hardly ever makes the news.

For that reason, we have to wait until the end of the year when the Kenya National Bureau of Statistics (KNBS) will compile the economic report for 2019. In the meantime, data from 2018 will have to do.

Last year, employment in the country increased by over 840,000 jobs. That is, the difference between those newly created and those that were lost. The vast majority of all workers, however, are in the so-called ‘informal sector’ of the economy.

There were about 18 million people working in the informal sector compared to just 2.8 million in the formal employment. Thus, the loss of a few hundred formal jobs should not be cause for worry from an economic policy standpoint. It does make a good news report, but it is insignificant.

The broader moral of this story is that we must be careful about what we get in the news. The media only covers the unusual. The uncommon. Rare occurrences. The only reason the lay-offs were reported is that losing a job is not common. It doesn’t happen very often. If it was the order of the day, nobody would bother reporting it in the news.

On the other hand, getting employment is so common that when people get new jobs, even in the thousands at one go – as has happened in the delivery-by-motorcycle industry – it never makes it to the news.