Kenya’s Jobs Growth Leaves 83.8% of Workers Informal

Kenya’s employment expanded by 4 per cent in 2025, but informal work continued to dominate the labour market, accounting for 83.8 per cent of all jobs, according to the World Bank’s November 2026 Kenya Economic Update.

The report found that informal employment remained the country’s main source of jobs, while formal employment accounted for just 16.2 per cent. The figures highlight the challenge facing Kenya as it seeks to turn economic growth into more secure employment, higher productivity and improved household incomes.

Formal wage employment grew by 3.1 per cent in 2025, an improvement from 1.8 per cent in 2024. The expansion was supported by job gains in industry and services, particularly manufacturing, financial services and electricity.

Real wage earnings also recovered, increasing by about 2 per cent during the year. The World Bank linked the improvement to stronger performance in industry and services, which helped support household incomes.

However, the report cautioned that the dominance of informal work continues to limit productivity gains, earnings growth and poverty reduction. Although informal activities provide employment for a large share of Kenyans, the persistence of this pattern points to difficulties in generating enough formal and productive jobs to absorb the growing labour force.

The update also warned that poverty risks remain elevated despite improvements in employment and wages. Higher fuel and transport costs, alongside pressure from food prices, could weaken household purchasing power and reverse some of the gains made by workers.

The World Bank argued that creating better jobs will require reforms that encourage private investment, support business growth and improve productivity. It also identified the need to reduce infrastructure and logistics costs, improve access to finance and simplify regulatory processes that increase the cost and uncertainty of doing business.

The report’s findings place the quality of employment at the centre of Kenya’s economic challenge. While the expansion in total jobs and formal wage employment signals progress, the high share of informal work shows that economic growth has yet to translate into broad-based access to more productive employment.

Sustained improvements will depend on whether businesses can expand, invest and create more formal opportunities for workers across the economy.