Kenyan workers are earning more in nominal terms, but rising prices are eroding those gains. Data from the 2025 Economic Survey, released on Tuesday, May 6, shows that inflation-adjusted average earnings declined by 0.3%, marking the fifth straight year of falling real incomes.
Despite a 7.8% rise in nominal wages, high living costs have continued to undermine the value of earnings. According to the Kenya National Bureau of Statistics (KNBS), this trend reflects inflationary pressure and slow salary adjustments, particularly in the private sector.
“This report serves as a compass for policymakers, researchers, investors, and the general public to understand and navigate our economic landscape,” said Treasury Cabinet Secretary John Mbadi during the launch event at the Kenyatta International Convention Centre (KICC) in Nairobi.
Informal sector
The report shows that out of 782,000 new jobs created in 2024, 703,000 were in the informal sector — highlighting the growing reliance on unregulated employment. CS Mbadi lauded the sector’s contribution to job creation and pledged more government support through targeted credit programs such as the Hustler Fund.
However, the growing informality of the labour market, coupled with stagnant real wages, has kept many Kenyans financially strained. Real average earnings also dropped by 3.1% in 2022, 3.8% in 2021, and 4.1% in 2020, extending a trend that analysts warn could impact household demand and long-term economic resilience.
While some sectors, including manufacturing and hospitality, recorded wage increases, these gains were largely neutralized by inflation.
Economic growth slows
Kenya’s economy grew by 4.7% in 2024, down from 5.7% in 2023, mainly due to climate-related shocks and protests linked to the 2024 Finance Bill. Despite the slower growth, key sectors such as agriculture (4.6%), financial services (7.6%), real estate (5.3%), and transport (4.4%) remained active.
Encouragingly, inflation fell from 7.7% in 2023 to 4.5% in 2024, supported by improved macroeconomic management and a stronger currency. The Kenyan shilling appreciated from Ksh159.69 to Ksh129.36 against the US dollar by the end of the year.
“The 2025 Economic Survey Report is not just a mirror of where we are, it’s a roadmap for where we are going,” Mbadi added.
As Kenya navigates economic uncertainty, the 2025 Economic Survey urges policymakers to address wage stagnation, formalize informal jobs, and implement policies that protect real incomes from further erosion.
