Donors are piling pressure on the Government to revisit a radical programme that would see thousands of national and county government employees sent home.
The retrenchment of redundant workers is one of several proposals put forward by the World Bank to cut operational expenses.
The World Bank joins its sister institution, the International Monetary Fund (IMF), which has recently been pushing the Government to significantly shrink its payroll.
In its latest update on the country’s economy, the World Bank has asked the Government to consider “cleaning the payroll of ghost and redundant workers and reducing the level of wage adjustments”.
The World Bank’s chief economist, Allen Dennis, noted that recalibrating fiscal consolidation from development to recurrent expenditure was going to be a challenge, but it was the only way the country could ‘safeguard fiscal consolidation’.
“A more ambitious cut in the recurrent spending is needed to rein in the fiscal deficit. This is critical given the increasing share of recurrent expenditure in revenues — both at national and county level,” reads part of the report released yesterday.
The sentiments by the World Bank and IMF rekindle the capacity assessment and rationalisation of the public service which sought to lay off more than 40,000 staff in late 2015.
The programme, which has since been shelved, proposed that public servants be offered a chance to retire and receive between Sh450, 000 and Sh750, 000 as ‘golden handshake’.
Kenya projected to save Sh185 billion from the retrenchment targeting thousands of Government workers. However, the implementation of the retrenchment exercise was called off as the elections approached, apparently for fear that it would upset voters at a time the President and governors were seeking re-election.
“In the run-up to the 2017 political season, few if any, leaders in the two levels of government will opt to adopt a retrenchment scheme for staff rationalisation,” the shelved report reads in part.
However, with elections now finalised, there is a strong push from the international partners to have the Government implement the radical proposal that could help it put its finances in order.
An advisory by the World Bank supporting the planned job cuts is likely to restart the exercise, considering that it is among the conditions tied to further access to credit to the State.
All eyes will be on the National Treasury which, through Cabinet Secretary Henry Rotich, will present the Budget for the financial year 2018/19 in less than 60 days.
The Treasury has already hinted that it would undertake belt-tightening reforms aimed at cutting its huge spending. These would include a freeze on new hiring and any new development projects.
Nearly 43,000 Government employees would be offloaded in the recommendations compiled under Anne Waiguru as Devolution Cabinet secretary and released in 2015. Waiguru is now the Kirinyaga governor.
Prof Margaret Kobia is the Cabinet Secretary for Public Service under whose docket civil service staffing matters fall. There were reports that the document could be presented to the Cabinet for discussion.
This comes at a time when the Government has embarked on what economists call fiscal consolidation, or painful policies aimed at reducing budget deficits and accumulation of debt.
In 2015, the National Treasury and the Central Bank of Kenya (CBK) promised the IMF that they would reduce the workforce before embarking on CARPS.
“Specifically, based on recent biometric staff audits, by end-March 2015, we will complete a report on personnel audits including a time-bound action plan for the national and county governments aimed at rationalising personnel to avoid overlapping positions,” said Rotich and then CBK governor, Njuguna Ndung’u.
The World Bank also wants the Government to reduce ‘operations and management expenses’ as part of fiscal consolidation.
Fiscal consolidation will affect mostly development expenditures, with the Government having to tame its appetite for loans, which have been pumped into the construction of roads, railway, and energy projects in the past five years.
However, the powerful Washington-based lender asked the Government to extend fiscal consolidation to recurrent expenditure as well. The World Bank is particularly concerned by the high wage bill at both the national and county governments.
This comes a few weeks after Kenya agreed to drastically cut spending to meet IMF’s tough conditions to access a $1.5 billion (Sh150 billion) credit facility.
The 2015 CARPS programme covered both the national and county governments. According to the report, the National and County Government Coordinating Summit, chaired by President Uhuru Kenyatta, resolved to implement the joint programme to ‘address human resource and structural challenges that affect smooth implementation of devolution’.