Only bold commitment to action, not conferences will end wage bill crisis

President William Ruto and SRC Chairperson Lynn Mengich during the official closing of the Wage Bill Conference at the Bomas of Kenya. [PCS]

The Third Wage Bill Conference happened this week with ambitious 10 resolutions. A notable resolution was for public agencies to institute measures to reduce the wage bill to the elusive 35 per cent wage-to-revenue ratio. Interestingly, this responsibility has been left to the Cabinet Secretaries of the respective ministries, and to the National Treasury and Controller of Budget (CoB) to monitor. Potentially, this is in itself the weakest link in the whole debate.

The conference is good for purposes of having a national conversation on this age old question. For historical context, it was the same problem that led to the disastrous Structural Adjustment Programmes (SAPs) in the 1990s. SAPs were the weapon of choice and antidote by the Bretton Woods institutions to force governments of developing countries to take action on ballooning public wage bills.

Evidentially, SAPs proved detrimental to provision of basic services in these countries, forcing the multilateral agencies to abandon them in the early 2000s. However, SAPs have been reinstituted from around 2014, and the Kenya Kwanza administration is demonstrably dancing to the tunes of these agencies.

The questions now open for analysis are: will the SAPs succeed where they failed before? and, what is different now that will lead to achievement of the intended outcomes for both the SAPs and the wage bill conference resolutions?  

Key flaws

A casual review of the conference proceedings raises important questions to ponder through. It would appear the majority of the participants and key speakers were the top political leaders. Some people may think this is good for a conference of such nature, but on a deeper reflection and analysis, this may actually be the weakest link towards the realisation of the target resolutions.

The short summation of it all is simply a government talking to itself on what they already know and understand very well. Tragically, the very political leaders who bear the greatest responsibility on the public wage bill problem were the very same ones reading beautiful speeches to the nation.

Take, for instance, the controversial Chief Administrative Secretary (CAS) positions orchestrated to reward political allies. The independent constitutional commissions championing the wage bill conversation have already sanitised these positions, giving them a false sense of legitimacy; while, at the same time, attempting to delegitimise valid Collective Bargaining Agreements (CBAs) with frontline healthcare workers.

For argument’s sake, let us take the proposed CAS salary of about Sh751,000 per month, plus an official car, an office with staff and other percks that go with the grandeur of high office in government. It is within reasonable bounds to estimate that it will not cost the taxpayers less the Sh5 million to maintain a single CAS in office.

This excludes associated costs of influence peddling and under the table deals.

Based on this simplified analysis, it is not hard to see that the cost of maintaining a single CAS a month could comfortably retain at least 25 medical intern doctors, at the disputed Sh206,000 salary per month. On a value for money scale, where should the weight of leadership decency tilt to in a country suffering from a public wage bill crisis? But the Kenyan politician misses no opportunity for a photo-op and to read a speech praising the former and castigating the latter in a wage bill conference? How tragic can things get in this country?

The demonstrate the void in this debate, the government spending on wages based on data from the government’s economic surveys grew from about Sh374.9 billion in 2013 to Sh790.4 billion in 2022. This translates to a growth rate of about 110.8 per cent in the past 10 years of devolved governance system. In the period 2018 -2022, the total public wage bill grew by about 25.35 per cent.

The convener of the conference, the Salaries and Remuneration Commission (SRC), has been in office for this entire duration. Two other conferences have also happened in the intervening period when these increases have happened.

Better Diagnostics

The SRC correctly identifies the costs of high wage bill to include the crowding out of resources that could have been used for development, loss of the competitiveness of the economy and negative impact on economic growth and development. On the other hand, the causes of such a high wage bill would be the expansion of services to citizens to achieve development goals, push for higher pay by public sector employees and low productivity that leads to slow growth in government revenues and the general economy.

Coincidentally, this week, I have been going through an innovative problem analysis approach developed by Harvard University called Problem-Driven Iterative Adaptation (PDIA). It provides a step-by-step approach to break down a complex problem into its root causes, identify entry points and search for possible solutions.

Assuming the SRC has correctly identified the causes of the high wage bill, then we may go further to establish their root causes. For example, while many people want to blame devolution as a key driver of the wage bill, the problem is not devolution per se. A proper diagnosis is the fact that successive presidents, county governors, Cabinet secretaries, county executives, commissioners, politicians and CEOs flood public offices with their cronies, kins and other busy bodies as soon as they assume public office. This completely disregards official staff establishments in the respective agencies and meritocracy.

This cycle is repeated after every transition in these high offices. Outgoing officials bully relevant institutions and junior public officials to regularise their misdeeds before they hand over office upon expiry of their terms in office. By extension, that may then explain the low productivity of the public service, the gross incompetence the president has been talking about and proliferation of fake academic certificates across  the entire public sector.

Unfortunately, the bad manners have diffused to the private sector, turning the entire country into Eric Wainaina’s lyrics of no longer ‘Nchi ya Kitu Kidogo’ but ‘Nchi ya Kitu Kikubwa’.

Another root cause of the wage bill drivers is the commoditisation of public office by a privileged few. Those with access to State power and resources literally turn their public offices into their private empires. The foreign and domestic travel expenditure reports from the CoB and Auditor General give snippets into the pervasiveness of this behaviour.

Commodisation of public office

Unfortunately, it is the top office in the land that is cheerleading this commodification of public office. Stranger than fiction, offices that are completely strange to the Constitution and the laws of the land have been rationalised and formalised without any legal instruments with budget allocations running into over a billion shillings and complete with staff on taxpayers’ tap.

Based on this simple prognosis, how then can we purport to solve a public wage bill crisis in a conference whose speakers are the perpetrators? How can the abettors and willing accomplices seek to find solutions to a problem they have been part off?

The International Monetary Fund, on a case study paper for Mali’s wage bill crisis posted 14th June 2023, finds salary freezes are not sustainable solutions to a country’s public wage bill. Such freezes not only offer a short-term relief, but are politically difficult to implement. What is required is an authentic structural reform with demonstrable sincere leadership from the highest office in the land.

A low hanging fruit is to publicly cease forth any CAS position proceedings, recover full payments and jail all fake certificate holders in the public service or among the ranks of State offices.

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