By George Morara
The International Labour Organisation (ILO) is leading a number of institutions specialized in labour to champion for formalisation of economic activities in a bid to promote decent work in Kenya.
According to data with the Central Organisation of Trade Unions (COTU), a paltry 4.6 million Kenyans out of more than 50 million citizens, are in formal employment, leaving a huge 80 percent eking a living from informal jobs.
Marva Corley-Coulibaly, a senior economist at ILO in charge of research is advocating for such strategy towards formalization, noting that it can be achieved through trade reforms by removing certain barriers.
Some of those barriers include high costs and complex bureaucracy for business registration and licensing, punitive tax systems, a lack of access to finance and capital, poor infrastructure, and limited access to market information.
Participants at a seminar on trade, investment and decent work in Kenya hosted by the ILO last week, heard that these factors, combined with harassment from authorities and a lack of skills and education, discourage informal businesses from joining the formal economy.
“At the ILO, we’ve been working on including stakeholders in conversations about the impact of trade. That’s the first step.
“So in order to have inclusive trade, you have to have inclusive discussions, understanding what the challenges are for some of these micro and small and medium enterprises and individuals who are engaged at the very margins of global supply chains,” she explained.
A survey ILO conducted on trade, investment and decent work in Africa with 57 countries including Kenya, identifies the agricultural sector as one of the sectors that has the greatest benefits with respect to trade.
Weighing in on the findings, she acknowledged the fact that the results extracted from the survey were interesting, both with respect to what some of the challenges look like in relation to trade and a range of the benefits.
“And one can understand that, because of the potential the sector has for bringing in a lot of employment for export earnings as well as for what it does with respect to the potential increases in productivity,” Corley-Coulibaly said.
However, she points out that there are many challenges as well, some of them having to do with the low productivity in the agricultural sector, but also with some of the competition with respect to trade and particularly for small and medium shareholders.
“And this points to the issue of formalisation and the informal economy. Indeed, in Kenya about 80 percent of the labour market is in the informal economy. So when one thinks about trade, the question that comes to mind is that of what can trade do for them? And if it can do something for them, how can it link to decent work?”
And she explained that this is what the ILO has been working on.
Corley-Coulibaly points out the need to change laws and regulations so that it can make it easier for those in the informal sector to be able to engage in the formalisation process as well as providing resources that they can use to increase their productivity. This, she emphasizes, will be able to enable them to compete with other enterprises.
“The potential is there, as well as the innovation,” she pointed out.
During the discussions, the labour experts agreed that the informal economy is strong as well as the players in the labour market, but the whole difference stems from how that untapped potential can be harnessed into strong growth and decent work.
According to Bruno Otiato from COTU, the trade union umbrella body has been advocating for decent work and labour rights within the movement, especially around trade agreements, which it considers skewed.
“As COTU we have continued to push the government, especially the Minister of Trade, to actually acknowledge that workers have a voice on trade agreements,” he said.
Since the first trade agreement that Kenya signed in 1994, that was the Common Market for East and Southern Africa (COMESA), and the various five other trade agreements, have had a provision on labour.
However, Otiato says that there has been little implementation or involvement of workers in monitoring and implementation of the same.
“So we are here today to simply have a conversation on how we can reform the framework on how workers can actually be involved in trade agreement negotiations and also coming up with the textual arrangements of the various clauses, especially in trade agreements,” he said, reinforcing the remarks with an explanation that this is meant to ensure that the trade agreements ensure that workers are covered.
Otiato said that COTU continues to call for the involvement of workers, especially in ensuring that workers who are taking part in employment actually have trade union rights, and social protection access, and that their rights are upheld in their various places of work.
“There are so many young people in Kenya working in business processing, outsourcing various investments that continue to face labour rights and trade union rights violation, and as COTU, we are here in this workshop to ensure that this conversation is actually actualised and that workers in these areas actually have their rights upheld,” he added.
However, he acknowledged that currently, decent work in Kenya, in COTU’s perspective, has actually been improving.
This is possible though due to the existing collaboration with the Ministry of Labour through an elaborate labour structure.
“As COTU, we continue to organise workers in various forms of employment, be it in the agricultural sector, textile sector, tech sector, manufacturing sector, so that their rights are actually upheld, and where we sit from COTU, the numbers have actually continued rising,” he said.
COTU, he said, is working closely with the government to ensure that more workers in the informal sector are brought into the formal economic stock building, bringing them into the formal sector.
“And how do we ensure that?….this is by calling on the government to ensure there is social security in the formal sector, ensure workers in the informal sector are getting their NSSF, they are paying for sure, KRA is also collecting their taxes, it brings them to the mainstream, it becomes you are promoting then more decent work in the informal sector,” he said.
However, Millicent Muli, a labour expert at the Ministry of Labour says that there is a need for a lot of public participation. information flow in terms of what is required, public awareness in terms of what is their rights when it comes to trade.
“But it’s also good to note that young people are increasingly also involving themselves in agriculture where most of the employment is being created. So there is a need to ensure that the young people are actually encouraged to go into the agricultural sector since that’s where we are finding that there is employment creation.” she said, but also acknowledged that the young people don’t actually have the resources to invest in the sector because they need to be resourced so that they can get involved in agriculture.
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KICKER:
“And this points to the issue of formalisation and the informal economy. Indeed, in Kenya about 80 percent of the labour market is in the informal economy. So when one thinks about trade, the question that comes to mind is that of what can trade do for them? And if it can do something for them, how can it link to decent work?”
GLANCEBOX:
There were approximately 16.7 million informal traders in Kenya as of 2023, which was a significant portion of the total workforce.
The largest sub-sector is wholesale and retail trade, hotels, and restaurants, which employed roughly 9.7 million individuals in the informal sector.
Manufacturing accounted for roughly 3.4 million informal jobs, with other sectors like transport, community, and personal services also contributing significantly.
Informal vs. formal:
The informal sector employs over five times more people than the formal sector in Kenya.
- approximately 7.5 million smallholder farmers in Kenya, though figures vary, and this sector accounts for a significant portion of the country’s agricultural output and employment. These farmers typically work with small land sizes, often under 5 acres, and their work is crucial for producing a large amount of the country’s food supply.
- there is an estimated 7.5 million smallholder farmers, although some government plans estimate closer to 4.5 million small farmers (including crop, livestock, and fisherfolk)
- about 75 percent of agricultural output is produced by smallholder farmers
Farm size:
- agriculture output comes from farms of less than 2 hectares
Employment:
- agriculture employs 71% of the rural population.
