Shock for workers as SRC starts to scrap allowances

Current SRC Chair Mrs. Lyn C. Mengich [Photo courtesy]

Most of the 149 allowances in the public sector will be done away with as State moves to ensure equity and tame ballooning wage bill.

Salaries and Remuneration Commission (SRC) has started implementing major pay reviews for the 750,000 public workers, with a focus on eliminating most of the 149 allowances.

In the first phase, only housing, hardship, leave and subsistence allowances have been assessed.

Although the four will be retained, they will be reviewed to ensure equity and to put the ballooning public sector wage bill in check.

A majority of the remaining allowances — which are often abused by the greedy to earn huge perks, will either be merged, harmonised or scrapped entirely.

For many jobs, allowances make up more than half of the gross pay but usually only the basic pay is widely referred to during workers’ clamour for salary increment.

This is the reason a fresh remuneration storm is expected, appreciating the place of the allowances in determining the take-home.

Implications of the changes will be huge for the individual workers as the new SRC team picks up from where the Sarah Serem one left.

Chopping the allowances will mean less money in the workers’ pockets, making the move a highly sensitive and emotive matter that is bound to stir bitter reactions.

But on the flipside, the allowances have led to huge pay discrepancies where a worker could be earning nearly twice the other doing the same job only that they work in different ministries.

A direct consequence of the inequity is a demoralised workforce, according to the SRC — a position informed by an earlier study by audit firm Deloitte.

“Despite various initiatives taken to rationalise allowances in the Public Service, allowances have continued to increase significantly in terms of numbers and amount relative to salaries,” said Lyn Mengich, the chairperson of SRC.

The move follows a job evaluation whose findings were critical in appreciating which allowances could be justified for the different roles, and the overall impact of the collective salaries paid by the State. 

The survey commissioned by SRC found lucrative allowances — it revealed that 61 different types of remunerative allowances account for 70 per cent of gross pay for public service employees.

The study by Deloitte explained the public sector was even attracting employees from the private sector because “allowances have the effect of doubling employee’s pay and in some instances growing it by a factor of 10.”

“The numerous allowances are used to conceal money paid out to civil servants and which forms a big part of their pay,” read the draft report titled ‘Wind of change’ submitted in August 2014 but whose contents are now being implemented.

Kenya’s public wage bill is currently over Sh700 billion a year.  The Government hopes to collect Sh1.5 trillion in taxes this year.

Simply put, the Government will be spending Sh5 out of every Sh10 collected to pay salaries.

At least Sh2 of the Sh5 will be in allowances which the Mengich team sees as outrageous and consequently hot candidate for the chopping board.

Following the planned review of the allowances and implementation of the new salary structure, SRC expects the public sector wage bill will stabilise over the next four years.

“In the medium term, it is expected that public sector wage bill will be reduced by Sh8.85 billion annually as a result of implementation of the reviewed remuneration and benefits structure for State Officers,” SRC said in internal action plans.

The harmonised pay structure for other public officers, SRC adds, will boost employees’ morale and enhance service delivery.

While some of the perks are outrightly ridiculous such as Direct Service Allowance which is paid to an employee for just doing their job, others are a duplication.

All the 750,000 public sector workers including those working for counties and parastatals will be hit.

Jerry ole Kina, acting secretary general of Union of Kenya Civil Servants, said any plans to consolidate the current allowances to the basic pay should be gradual to cushion workers.

“It must be done in a very systematic way. The matter touching on allowances is very tricky and therefore should be a gradual process where eventually it affects those being employed afresh and not those already in service,” he stated.

And he cautioned: “The allowances cannot be stopped immediately without the contributory pension being in place. Also not all allowances can be targeted.”

In the agency’s latest newsletter, SRC spokesman Ali Chege wrote that some senior Government officials “were likely to use their privileged position to award themselves unjustified huge perks” through such allowances.

Chaotic pay reviews historically occasioned by worker strikes and blatant abuse of office and absence of guidelines have resulted in huge disparities.

In a classical recent case, Government nurses won a Sh10,000 nursing allowance to their pay slips after a protracted battle that also played out in the streets.

Allowing their demands immediately created a pay discrepancy with their colleagues in the public health sector, including pharmaceutical and laboratory technologists, who do not enjoy the same.

Yet somehow, it has been the way the different cadres of workers won that brought about a  distorted pay scale.

Capping the public wage could mean more resources will be channelled to meet other essential needs as provision of better and affordable health and clean water.