Tough times for public servants as wages fail to measure up cost of living

NAIROBI, KENYA: Public servants have not been able to keep up with the rise in the cost of living after an analysis showed inflation blew up their wage increases.

Data by ICEA Lion Asset Management, a fund manager, shows that average annual increase in average public sector wages between 2013 and 2018 at 5.5 per cent has been slightly below the average inflation- or a general increase in prices and fall in the purchasing value of money- of 6.5 per cent in the same period.

This means that although President Uhuru Kenyatta’s administration is succeeding in its fight against ballooning wage bill-which it has described as a national crisis-the campaign is turning out to be counter-productive as civil servants struggle to keep away with the increased cost of living.  

Workers in the private sector, however, have been well-cushioned against a surge in the cost of living, with their wages rising faster than average inflation during this period.

On average, private-sector wages during this period has gone up by eight per cent, surpassing the average inflation rate of 6.5 per cent between 2013 and 2018.

“We also noted that average private-sector wage increments have beaten average inflation over the last five years, while average public sector wage increments have lagged behind average inflation over the same period, which points towards progress in controlling the wage bill and hence the fiscal deficit,” said Judd Murigi, ICEA LION Asset Management’s Head of Research.

This means that average annual wages in the private sector which were lower than those in the public sector in 2014 have raced past the latter as of 2018.

Depressed earnings in the public sector have been attributed to the Government’s spirited fight against a ballooning wage bill which it says has been taking much of the country’s tax revenues to the detriment of other equally important spending items.

“The government has taken notable steps towards controlling the public sector wage bill, in an attempt to reduce the fiscal deficit,” read part of the report.

 The Government, which in the recent years has frozen new employment and promotion except for critical sectors such as security, health and education, noted that it would continue with the policy in the current financial year, besides implementing a raft of other measures to contain the public wage bill.

Cabinet Secretary Henry Rotich in his Budget Statement for Financial Year 2019/20, proposed for a limit in the extension of service for many civil servants who are retiring after the age of 60 years.

“Further, Mr Speaker, a cleansing of the wage bill will be undertaken to root out ghost workers. The Government will also fast track migration from the current Integrated Payroll and Personnel Database System (IPPD) to IFMIS Human Resource Module to improve payroll management,” said Rotich.

Public servants, particularly teachers, lecturers and health personnel, have increasingly agitated for better perks arguing that this was to shield them against the increased cost of living. But the Government has insisted their demands were not merited.