Unemployment vs Underemployment

Most often we hear unemployment statistics used as an indicator of a population’s income levels. In most developing nations, however, it is common to work fewer hours than what is necessary to survive or have a job that pays too little. Both give rise to what is known as underemployment; an un-utilised workforce and negative social consequences. These people do not count towards government statistics – after all they do have a job – but are nonetheless not generating enough income to support a decent standard of living. Underemployment is especially common amongst unskilled labourers; in industries like construction, hotels and restaurants, and commercial agriculture it is hard for workers to find enough work during the whole year. Women are more likely to be underemployed than men, since they are less likely to be employed in formal sectors where wages are relatively higher.


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underemployment can also be caused by over-qualification – workers having higher qualifications than available jobs require – in Western Kenya where TradeRelief works, it’s

mainly caused by an unproductive labour force – hiring more people wont increase revenue for businesses and wages reflect that. Especially young people struggle to find meaningful employment – while making up a bit more than third of the population, under-25s make up 60% of the un- or underemployed. With 45% of the population below 15 years, there’s no reason to expect that to change any time soon.

Leading financial institutions such as the World Bank and the IMF for many years held the belief that what was required was economic growth; once at a high enough level, the Kenyan economy would absorb the currently-unproductive labour. However, despite growing quite well the last decade or so, weathering both the global financial

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crisis and the Euro crisis well, but the Kenyan economy has seen a jobless growth. One thus cannot rely on prevailing market forces alone to provide meaningful employment to Kenya’s

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youth and a targeted approach is necessary. One that seeks to create employment that is not only fulltime but also pays a salary people can live off. At TradeRelief, we try as credit-providers to push growth in sectors that create jobs that are fulltime but not exploitative, well-paid, productive jobs that not only give a decent income but also sociologically enriches a person’s life. F

ollow this blog, like us on Facebook or go to our website www.traderelief.org for more details on our work and to read case studies on some of the

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