High civil service pay hurts taxpayers

NAIROBI, KENYA: Two of every Sh5 collected in taxes goes into paying salaries for government employees, a scary prospect highlighting the time bomb that is the public wage bill.

Spending on critical services such as healthcare is constricted by the sky-high salaries which are padded by numerous allowances, some outrightly irregular.

Utilising more of the internally generated funds to meet salaries means that financing of development projects is increasingly being done through debt financing.

As a result of the huge salaries, government has in recent years leapfrogged the private sector as the better employer on average owing to such allowances – an abnormal disparity in poor countries.

In the more taxing private sector where employees work for longer hours, compensation had historically been higher as it is tied to productivity.

Besides the job security that is more guaranteed in government jobs, the typically lethargic civil servant is better remunerated at Sh57,915 a month against Sh56,624 in the private sector.

Last year, for instance, the public wage bill was just about Sh550 billion in a period the Kenya Revenue Authority collected only Sh1.36 trillion.

While it is not immediately possible to determine what proportion of the cumulative salaries was paid as allowances, past research has indicated the figure could be up to 70 per cent.

“Currently, allowances have the effect of doubling employee’s pay and in some instances growing it by a factor of 10,” read recent findings by Kippra, a public sector think-tank.

In the extreme cases, according to the report, an employee earning a basic pay of Sh100,000 could find his gross pay jump to Sh1 million.

Consequently, the government had emerged as the preferred employer, the researchers said in their conclusion.

Senior officers in the public service tended to enjoy tens of benefits worsening the pay disparity against comparatively poorer remunerated juniors including clerks.

“The numerous allowances are used to conceal money paid out to civil servants and which forms a big part of their pay,” Kippra reported, citing that some officers are paid sitting allowance to undertake routine roles demanded by their jobs

Kippra had been commissioned to carry out the study by the Salaries and Remuneration Commission.

SRC recommended a review of the allowances earned by public servants over and above their salaries, and influence of the said perks on the overall public wage bill.

Such allowances include house allowance, entertainment allowance, transport allowance, non-practicing allowance and extraneous allowance.

It is therefore imperative that a study on allowances is conducted not only to identify the number of these allowances but also establish their relative influence on the public wage bill.

Such allowances include house, medical, entertainment, transport allowance, non-practicing allowance, extraneous, hardship, special duty, transfer, leave and responsibility, among many others.

It was established that the allowances broadly fell into two categories; remunerative and facilitative – those that would enable the workers deliver such as payments for travel and uniforms.

Remunerative allowances are automatically paid in a package together with the salaries, and were found to be up to 61 different types.

“Although the remunerative allowances can be tracked through payroll, it is difficult to quantify the facilitative allowances in the public service,” Kippra said.

Among the reasons advanced for the soaring wage bill is the formation of independent commissions whose staff were largely recruited from the private sector.

The new employees bargained for basic pay that was at least comparable to their previous jobs, with little focus on the additional payable allowances.

In a specific finding then, the average monthly pay among the Independent commissions have an average gross income of Sh220,000 – after including the junior-most staff, which is very highcompared to the average private sector pay of Sh33,800.

Commissioners were found to be earning way fatter salaries compared to chief executives of listed corporations.