Nairobi, Kenya – The World Bank has issued a stark warning about a potential global jobs crisis, particularly in developing countries, citing a significant disparity between the number of young people entering the workforce and the availability of employment opportunities. This alert, detailed in its FY25 Annual Report released on Monday, October 13, 2025, underscores a critical challenge for nations like Kenya, which grapple with a large youth population and persistent unemployment concerns.

Ajay Banga, President of the World Bank Group, cautioned against inaction, stating that the world 'cannot simply wait to see the disaster unfold.' The organisation's projections are based on current trends in population growth, education levels, and economic productivity.

“In the next decade, 1.2 billion young people will enter the workforce in developing countries—but in those same countries, only 400 million jobs are expected to be created. That leaves 800 million young people without a clear path to opportunity,” Banga stated.

Historical and Political Context in Kenya

Kenya's labour market has consistently faced the challenge of absorbing its rapidly growing youth population. According to the Kenya National Bureau of Statistics (KNBS) 2019 Kenya Population and Housing Census, youth aged 15-34 years constituted 36.1% of the total population. The country has a dual economy, with a large and expanding informal sector and a smaller, relatively stagnant formal economy.

While Kenya's economy has demonstrated robust growth in recent years, averaging about 5.4% between 2013 and 2016 and 5.5% between 2017 and 2019, this growth has not translated into sufficient productive jobs. Over one million young people enter the Kenyan labour market annually. However, job creation has not kept pace with this influx.

Laws, Policy, and Governance

The Kenyan government has implemented various policies and programmes aimed at addressing youth unemployment, including initiatives to promote entrepreneurship and vocational training. However, the effectiveness of these interventions has been a subject of ongoing debate. The 2010 constitutional transformation at the county governance level has also reshaped public service dynamics, though implementation gaps in labour laws persist.

Stakeholders and Testimonies

Organisations like the Federation of Kenya Employers (FKE) continue to partner with the government to support businesses in creating and sustaining new jobs, and to nurture entrepreneurship and innovation among the youth. Analysts suggest that the World Bank's recent warning could influence near-term public debate and policy execution, with stakeholders urging clarity on timelines, costs, and safeguards for job creation initiatives.

Evidence and Data

The World Bank's FY25 Annual Report highlights a projected gap of 800 million jobs for young people entering the workforce in developing countries over the next decade.

• Youth Unemployment Rate (Kenya): The youth unemployment rate (ages 15-24) in Kenya was 11.93% in 2024, a slight decline from 12.01% in 2023. However, other sources indicate higher figures, with some estimates placing youth unemployment (15-34 years) as high as 67% (Federation of Kenya Employers) or 35% (Kenya National Bureau of Statistics, 2019).
• Job Creation (Kenya): In 2024, Kenya's economy created 782,300 new jobs, a decrease from 848,100 new jobs in 2023. Approximately 90% of these new jobs were in the informal sector.
• Informal Sector Dominance: The informal sector accounted for 83.6% of total jobs in Kenya in 2024.

Risks and Implications

The World Bank warns that a failure to address the jobs mismatch could lead to widespread unemployment, poverty, social instability, and lost economic potential. For Kenya, high youth unemployment poses a significant threat to stability, potentially hindering economic development and increasing social unrest.

Unknowns and Controversies

While various statistics on youth unemployment exist, there can be discrepancies depending on the age cohorts considered and the methodology used (e.g., strict definition of unemployment versus broader labour underutilization). The exact number of quality jobs needed to absorb Kenya's youth remains a critical area for further detailed analysis.

Timeline and Next Steps

The World Bank's warning, delivered on Monday, October 13, 2025, emphasizes the urgency of action in the coming decade. The institution advocates for collaborative efforts between governments and the private sector to address investment and policy gaps that restrict growth and job creation.

What to Watch

Stakeholders in Kenya will be closely watching for government responses to the World Bank's warning, particularly regarding concrete strategies to boost formal sector job creation and enhance skills development for the youth. The implementation and impact of policies aimed at mobilising private capital and strengthening governance will be crucial in mitigating the projected jobs crisis.