Holders of State jobs will be in for a rude shock come September when the proposed salary cuts by the Salaries and Remuneration Commission (SRC) take effect.
Civil servants with permanent and pensionable terms will not be spared either as their allowances are set to be harmonised and revised downwards in a move to tame the wage bill. And if the trend in reducing the wage bill is adhered to, salaries are likely to suffer a two per cent reduction across board. Newly-elected MPs, MCAs, Senators, Governors, and even the President whose term of office comes to an end in August will not benefit from the current pay structure where the Head of State earns Sh1.2 million.
Instead, they will be paid less than what the current state officers are currently earning if a new pay structure under review by the SRC is adopted.
These revelations were made by the SRC when they released a brief report to the President during the State of the Nation address.
And yesterday, SRC Chairperson Sarah Serem, spelling out the commission’s ‘sweeping powers’ to ensure economic performance and affordability, reiterated that the reviewed salaries and benefits would not be subject to any changes or further review.
Also, the commission is pushing for a freeze on employment to manage the pension burden and public debt. “The Constitution is law. Our set salaries will be final. It will not be subjected to any discussions. We will not vary the figures once set. We must start having more money going to development than going to individuals’ pockets,” she emphasised.
However, the President and his team will earn the current pay till the end of their term.
This is because under the labour laws, employees cannot have their pay reduced in the middle of their contract. SRC, the body charged with the mandate of setting salaries and allowances in the public sector, is now talking tough in the wake of an unsustainable wage bill, which stands at 50 per cent of the revenue raised nationally, of which allowance is at 35 per cent.
Further, the wage bill to recurrent expenditure is above 50 per cent, compared to the international desired level of less than 40 per cent.
Notwithstanding other wage bill sustainability indicators, Kenya’s wage bill is already way above what is considered to be affordable and sustainable. Ms Serem explained that when the commission was set up, Kenya’s wage bill was at 52 per cent of the total revenue, which she termed as unacceptable under the prevailing economic conditions.
“The commission has now been able to reduce it by only two per cent as Kenya’s wage bill is now at 50 per cent, which is still far away from the international required standards of 35 per cent,” she explained.
Given that SRC has managed to achieve a two per cent reduction in four years, it is unlikely that the wage bill will be fixed any time soon.
Indeed the reduction would be at only two per cent for the entire 700,000 workers in the civil service.
Presently, over 3,000 State officers drawn from the Judiciary, legislature, the Executive, commissions and independent offices take home over Sh14 billion of the Sh627 billion recurrent expenditure in salaries and about 100 difference allowances.
But what will be affected most are the contentious allowances whose report has already been presented to the SRC by Delloite dubbed “A Study on Allowances Payable in Public Institutions in Kenya — Draft Report”.
In the report, independent commissions and Judicial Service are spending on average 52 per cent and 60 per cent respectively more on remunerative allowances than the budgeted remunerative allowances amount.
The parliamentary commission also spend 14 per cent more than the budgeted amount.
Teaching service, public service and state corporations spend within the allocated budgets.
This shows that more than 50 per cent of the institutions surveyed are spending more on remunerative allowances than the budgeted amount. The result is funds allocated for other purposes are used for allowances that may not be necessary.
The impact of remunerative allowances to the personal emolument ranges from 26 per cent to 67 per cent which is not within the proposed ratio by SRC of 40:60.
In the Public Service Commission (PSC) remunerative allowance account for 67 per cent of the PE budget. The Parliamentary group also had very high remunerative allowances which accounted for 61 per cent of the PE budgets.
This should be regulated to a maximum of 40 per cent. It is these allowances that are a target by the SRC for reduction.
The latest move by the salaries body targeting also State officers follows increased the clamour for higher perks by public officers, an exercise that is set to face a backlash especially from politicians and top government officials, forcing them to adjust their flamboyant lifestyles.
Flanked by fellow commissioners at a press conference held at Windsor Hotel, Nairobi, Serem said the focus of SRC is to maintain status quo and an enhanced revenue.
She lamented that the instability in remuneration has gone up both at the national and county level, going by the numerous strikes.
“This is why we are in discussions with the employing entities to freeze employment, in order to have a small number that the pension can also be managed. Pension is a liability, we can only handle contributory if we minimise salaries,” she suggested.
She set the record straight that the exercise is not targeting politicians but all arms of government.
“The unsustainable wage bill is a reality and a challenge the country is facing. The big thorn is the country’ economic growth, public debt and pension burden. The demands for huge perks has strained the country’s finances,” said Serem. She continued: “This should be a concern to everybody. As SRC, we assure Kenyans that will try to delivery on our mandate by ensuring the public wage bill now at 50 per cent yet globally, it is supposed to be at less than 35, comes to a manageable level.” According to Serem, comparative in Africa, Kenya is among the top four countries that pay the highest in the public sector. Others are South Africa, Nigeria and Tunisia.
“This means the other countries are doing very well in terms of managing the wage bill.
She admitted that they cannot get results overnight but the several parameters put in place will fast track the process.
“We are encouraged by the goodwill from the political class. We are determined at whatever cost to address this matter,” she underlined.
Just like the push and pull witnessed in 2013, it might be a hard nut to crack for the commission, even though the pay will be implemented after the August polls.
Serem argued that the current wage bill has direct impact on the economy.
“A stable economy is the strength of any country and issues wage bill cannot be addressed in isolation. It is necessary to discuss the matter with all stakeholders including the President,” she said to justify her decision to share the interim report with the President.
She continued: “We undertook a job evaluation of all public entities from 2013 and the information is still valid. We must sustain our wage bill. We are not going to set levels for individuals but offices and they must be harmonised.”
Though Serem declined to release the interim report of a review that has been ongoing since November last year and which she shared with the President, she maintained that salaries slash shocker will not spare any cadre of office.
Additional reporting by Luke Anami