Assessing the relationship between industry type, firm characteristics and employment size in Teso sub-region.

Abstract

This study assessed the relationship between industry type, firm characteristics, and employment size in the Teso sub-region. Previous studies have shown a shift from traditional sectors such as agriculture and manufacturing to trade and services. However, employment creation at the firm level has remained low. The study used secondary data from the 2019/2020 Census of Business Establishments (COBE), comprising 1,835 enterprises across the 11 districts of the Teso sub-region. A quantitative cross- sectional research design was adopted to examine the influence of industry type, monthly turnover, business age, and ownership type on employment size. Descriptive statistics, Pearson correlation, Kruskal–Wallis tests, and negative binomial regression were used for data analysis. The findings revealed that most firms employed an average of three workers, indicating that the region is dominated by micro and small enterprises. Trade was the most dominant industry (58.2%) however agriculture, despite having relatively few firms, employed the highest average number of workers per firm. Monthly turnover showed a strong positive relationship with employment size (r = 0.6342, p < 0.001), whereas business age had a weak relationship. Individual-owned enterprises constituted 87.8% of firms but employed fewer workers than formalized enterprises. The negative binomial regression identified monthly turnover as the strongest predictor of employment size, with a 72% increase in expected employment for each unit increase in turnover. The study concludes that although firms have diversified into other industries, this has not translated into higher employment at the firm level. It recommends policies that enhance firm revenues through improved market access, infrastructure, and credit access, while promoting business formalization and agricultural modernization to increase employment.