Tough times for public servants as wages lag cost of living

Public servants have not been able to keep up with the rise in the cost of living despite wage increases, new data shows.

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

This means that although President Uhuru Kenyatta’s administration is succeeding in the fight against the ballooning wage bill, the campaign is turning out to be counter-productive as civil servants struggle to keep up with the rise in the 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 have 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 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 last year.

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.