Public wage bill to hit Sh363b in first quarter on pay reviews

Previous reports indicated 47 counties spent a total of Sh139 billion on personnel emoluments. [iStockphoto]

The public wage bill will rise by eight per cent in the first quarter of the 2023-24 financial year, according to projections by the Salaries and Remuneration Commission (SRC).

Total expenditure is projected to increase to Sh363.38 billion in the July-September 2023 period from Sh336.65 billion in the first quarter of 2022-23 financial year.

This is according to the First Quarter Wage Bill Bulletin for the 2023-24 financial year released by SRC on Friday.

However, the bulletin says that although the total personal emolument (PE) is projected to grow in absolute terms, the PE vote as a share of the total revenue is projected to reduce from 19.2 per cent in the first quarter of the last financial year to 17.3 per cent this year.

PE for national government is projected to reduce to Sh126.83 billion compared to Sh130.89 billion in a similar period in the 2022-23 financial year. 

On trends, the ratio of wage bill to nominal gross domestic product (GDP) is expected to reduce marginally in financial year 2023-24.

“This ratio is projected to decline towards 7.5 per cent, which is the average for developing countries, and seven per cent, which is the internationally desirable level,” said SRC. The wage bill to ordinary revenue ratio is projected to be 43.54 per cent in financial year 2022-23 and 40.45 per cent in the current financial year.

“Further, over the last eight years, the public wage bill to total revenue ratio was highest in financial year 2020-21 at 45.9 per cent. This is projected to reduce to 32.15 per cent in the current financial year.

The total wage bill is projected to grow at a slightly slower rate of 6.37 per cent in 2023-24 financial year, SRC said. 

During the quarter, the commission approved requests from the public worth Sh24 million, representing 60.4 per cent of the total requests from public service institutions, which amounted to Sh40 million. 

This amount, it said, was from 36 requests received from public institutions. These included 24 requests accounting for 67 per cent on allowances and benefits, eight requests accounting for 22 per cent on collective bargaining agreements and four requests accounting for 11 per cent on bonus. 

The total expenditure on personal emolument for county governments is projected to increase to Sh107.23 billion, representing a 95.6 per cent rise compared to the same period in 2022-23.

The expenditure on PE is projected to increase from Sh43.15 billion in the first quarter of 2022-23, to Sh48.77 billion in the first quarter of 2023-24, representing a 13 per cent growth.  

“This increase is attributed to the partial effect of the third cycle of salary reviews, which awarded county governments a pay review of 18.8 per cent spread across two fiscal years,” said SRC.

“This could also be attributed to the growth of the county government’s expenditure in absolute terms.”

Although the county quarterly PE component, as a share of the total expenditure, is projected to reduce from 78.7 per cent in the first quarter of 2022-2023 to 45.5 per cent in 2023-2024, SRC said this is not more than 35 per cent threshold set by the Public Finance Management (County Government) Regulations, 2015.