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Treasury backs salaries team on MPs’ pay

BUSINESS
By James Anyanzwa | June 13th 2013

By James Anyanzwa

Nairobi, Kenya: MPs’ clamour for salary increment suffered yet another setback after the National Treasury termed the growing public wage bill “unsustainable” under the current economic conditions.

Treasury has also thrown its weight behind the Sarah Serem-led Salaries and Remuneration Commission, saying the exchequer would work closely with the team to ensure sustainable wages.

Half its revenue

National Treasury Cabinet Secretary Henry Rotich warned that the Government is currently spending more than half of its revenue on wages in an economy that is facing falling revenue collections and soaring youth unemployment levels.

“As the National Treasury, we cannot bury our heads in the sand simply because this issue is very emotive. We must offer solutions and feasible alternatives and communicate this to Kenyans in a persuasive and convincing manner,” he told The Standard.

“The issue of the wage bill really must be looked at vis a vis the resources the economy generates, the tax rates that we cannot afford to raise, the current high youth unemployment levels and the level of wages in the EAC region and economies the size of Kenya’s.”

Rotich underscored the need for a wage policy with clear objectives and principles as enshrined in the Constitution and Public Financial Management (PFM) law.

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“At about 12 per cent of the GDP — equivalent to about 53 per cent of revenues, implying that we are spending more than half of our revenues on wages — no one needs to tell us that this is unsustainable,” he said. “We are going to work very closely with the SRC to ensure sustainable wages.”

He added that Treasury would also work with the SRC to rationalise the public service to make it lean, efficient, effective and accountable.

This, he said, would also include leveraging on ICT and leasing of assets and equipment as well as engaging the private sector in public partnerships to deliver key priorities.

The SRC has proposed a Sh532,000 monthly salary for each legislator, down from Sh851,000, translating to a total of Sh221.3 million a month, Sh2.6 billion per year and Sh13.2 billion in five years.

The commission’s proposal, which aims to control the escalating public wage bill, would save taxpayers Sh12.3 billion at the expiry of the 11th Parliament in 2018.

Approved a motion

However, MPs unanimously approved a motion to overturn the decision to reduce their salaries. They expect to revert to the National Assemblies Remuneration Act, which set their salaries at Sh851,000.

The move has drawn public outrage, with church leaders, civil society and constitutional commissions terming it as going against the spirit of the Constitution, which provided for an independent agency to review and set salaries for all State officials.

The legislators’ salary demands have been criticised for being in disregard of the poverty levels in the country.

The World Bank estimates that Kenya’s poverty level stands at 44 to 46 per cent, which is almost the same level it has been the last six years.

Kenyan taxpayers, through the National Taxpayers Association (NTA), termed MPs salary demands as “unacceptable” and driven by selfish interests.

President Uhuru Kenyatta has also signaled his discomfort with the shape of the national Budget, saying the ballooning public sector wage bill is unsustainable.

At Sh458 billion, Kenya’s public sector wage bill stands at a high of 12 per cent of the gross domestic product (GDP) compared to the globally recommended average of seven per cent of GDP.

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