By Luke Anami

The economy is on the brink of a public sector wage implosion. The trend is piling pressure on the Government to cut back on infrastructural development.

 Teachers are on strike demanding 300 per cent pay hike, doctors are pushing for better terms, and university lecturers called off their strike after signing Sh7.8 billion deal that saw a 33 per cent pay jump.

 The strikes are pilling pressure on the public wage bill, which is already outstretched, with Treasury warning that the salary demands will not be tenable under the current environment.

With revelations that Kenya’s wage bill is beyond the 70 per cent, which is the internationally recommended, puts the Government between a rock and a hard place. Analysts warn further yields to demands might compromise the budgetary vote to development.

 This is because the budget making process, which has been anchored in the Constitution and whose stage to include teachers’ demands have been overtaken by events have altered Government expenditure.

Honoured

  “The teachers strike could have been avoided had the Government honoured its part of the bargain,” Jacqueline Mugo, CEO Kenya Federation of Employers said in an interview with The Standard On Sunday.

  “The moment you don’t honour an agreement, you present a situation where no one can trust you. Trust is at the heart of industrial relations.”

 She said both teachers and doctors may be right, but the process is wrong.

 “When you decline to honour the courts the same way the Government has done, then we are throwing this country into a mess.  It is unethical for doctors to go on strike yet their demands are genuine,” Mugo added.

 Ms Mugo observes a situation whereby once two negotiating parties ignore the rules, they will be more strikes. Unfortunately it is the citizens who suffer most.

 Economists are concerned that the teachers’ strike may not yield much given the huge size of workers, but may further hurt the economy.

  “It is not possible to meet those demands right away partly because there are fiscal constraints on revenue and of course the budget has been approved,” Kwame Owino, CEO Institute of Economic Affairs. “For anything to be done will require a supplementary budget.”

 The public sector wage bill has increased at an annual average of 36 per cent over the last five years. The bulk of the growth is attributed to the hefty salaries of senior public servants, which have risen disproportionately in comparison to those in the lower and middle levels of the service.

Nominal wage

 The 2012 economic survey shows Kenya’s nominal wage bill rose to Sh878.7 billion, an 8.8 per cent growth from Sh807.9 billion paid out in 2010.

 Economic analysts warn that the increase in recurrent spending will strain the economy and starve infrastructure development. 

“The current public wage bill is not affordable, it is not sustainable,” Robinson Githae, Finance Minister warns. While teachers’ demands are not surprisingly new, the budget making process has changed following the enactment of the new Constitution.

 For instance, under the new Constitution, Parliament has the powers to include the teachers and doctors’ demands in the budget but they did not do it early this year when the budget making process allowed them to do so.

 Ironically it is the same MPs now urging the two principals to yield to teachers’ demands, which begs the question on who is best placed to educate Kenyans on the new Constitution.

 Further, the Controller of Budget has the powers to allow Government expenditure.

 No one else has the powers, not Medical Services Minister Anyang’ Nyong’o, or his Education counterpart Mutula Kilonzo.

 The best the negotiations can go is to break down the payments if any in a number of phases.

 But the big dollar question is to whether the Government will honour the payments should they sign taking Kenyans back to the same old song of strikes come another election period?

Doctors’ demand

  “We are going to have a meeting today (Saturday) at our offices then from there we are going to decide what to do next,” David Okuta, Secretary General Kenya National Union of Teachers said in an interview.

 “We will tell you what our next move will be should the Government fail.”

 Huge provisions for NPLs have previously eroded banks’ bottom-line and stoked their financial mystery in harsh operating environment.