Kenya's manufacturing sector has overtaken other industries as the country's biggest source of new formal jobs, helping the private sector create about 54,500 wage positions in 2025, a new World Bank report shows. The findings point to a changing labour market, with factories, financial services and the energy sector opening more opportunities even as most workers continue to earn a living in the informal economy.
The latest Kenya Economic Update by the World Bank paints a mixed picture of the country's employment market. While formal hiring picked up during the year, informal work still remains the main source of income for the majority of Kenyans.
According to the report, the private sector added about 54,500 new wage jobs during the year.
"In total, the private sector added about 54,500 new wage jobs," the World Bank said in the report.
Manufacturing recorded the highest increase in formal employment after expanding by 5.9 per cent. The sector benefited from improved industrial activity and a better business environment, allowing it to outperform many of the country's traditional employers.
The financial and insurance industry also recorded strong hiring, with employment rising by 4.4 per cent. The electricity sector followed with a 3.8 per cent increase in formal jobs.
The report also shows that Kenya's industrial sector posted stronger growth in 2025, expanding by 4.7 per cent compared to 1.1 per cent in 2024. Manufacturing, construction and mining were among the industries that supported the recovery.
The stronger performance suggests that industrial production and service-based businesses are becoming more important in creating jobs, especially for young professionals and workers with specialised skills.
Apart from job creation, the World Bank says workers also experienced better earnings after several years of declining purchasing power.
"After continuous yearly declines, real average wage earnings grew by 2 percent in total, with wages in the formal private sector growing by 3.9 percent in the year," the World Bank stated.
The increase in wages is expected to support household incomes and spending, although many families continue to struggle with the high cost of living.
Even with the rise in formal employment, the report shows that Kenya's economy still depends heavily on informal jobs.
Informal employment made up 83.8 per cent of all jobs in 2025 after growing by 4.1 per cent during the year.
"Employment growth remained strong in 2025, but most jobs are still created in the informal sector," the report noted.
The findings show that many Kenyans still rely on self-employment, casual work and small businesses, which in many cases offer lower incomes and less job security than formal employment.
The World Bank says the continued dominance of informal work remains a major challenge as Kenya seeks to create quality jobs, reduce unemployment and improve productivity for its growing population of young people.
For those planning their careers, the report identifies manufacturing, financial services, insurance and the energy sector as some of the industries currently providing the strongest formal employment opportunities.
It also says Kenya will need more private investment and continued industrial expansion to create enough jobs for the millions of young people joining the labour market each year.
Although the outlook for employment remains encouraging, the World Bank warned that higher fuel prices, food inflation and global economic shocks could slow business activity and weaken household spending.
The institution expects Kenya's economy to grow by 4.3 per cent in 2026, supported by services, manufacturing, tourism, financial services and trade, which are expected to remain the country's main drivers of economic growth and employment.
However, the report cautioned that continued fiscal pressure, rising public debt and uncertainty in the global economy could slow investment and reduce hiring if those challenges are not addressed.
Even with those risks, the latest findings show that formal employment is gradually expanding, with manufacturing taking the lead as Kenya works to create more stable jobs and reduce dependence on informal work.