International Monetary Fund pushes for lower allowances

In a move that could trigger harsh resistance from a majority of civil servants, the International Monetary Fund has prescribed the lowering of allowances to the State officials to help contain the ballooning wage bill.

Of particular concern to the IMF is the ever growing huge gap between the public and private sector pay levels with the public officials earning higher salaries than their private sector counterparts mainly because of the allowances they enjoy.

The situation has been worsened by the new county governments, which have come up with attractive salaries and allowances in a bid to attract the right talent from the private sector.

The fund regrets that while the 2013/14 initial budget had envisaged a lower central government wage bill on account of cost savings related to the staff that were devolved to counties, this was more than offset by salary increases and additional recruitment at the central government level in the course of the year.

In its latest assessment of the country, IMF says the rising wage bill is crowding priority infrastructure spending, something that might slow down the country’s economic growth plans.

Some of the public servants likely to be affected under the IMF proposal include constitutional office holders, parastatals, county government employees and senior national government staff. Some of the highest allowances paid to public servants, which could be cut include transport, special salaries and leave allowances.

“Wages are higher in the public sector and the wage gap has been widening in recent years. This is mainly due to allowances, even after accounting for socio-economic characteristics of workers,” IMF says in its report after the conclusion of the so-called Article 4 consultation with the Kenyan government.

IMF, which has been met with stiff resistance before from critics allegedly prescribing unworkable solutions for the country, now wants the authorities to streamline the allowances and tighten the eligibility criteria to gradually reduce the gap between public and private sector pays.

In yet another decision by the fund that might face opposition from the public officials, IMF has supported a move by the government to freeze new hiring this financial year as well the start of a rationalisation process aimed at containing the wage bill.

IMF has also thrown its weight behind a move by the national government to implement a radical parastatal reform following recommendation of a task-force formed by President Uhuru Kenyatta.

The proposal entails the merger and dissolution of various parastatals that would reduce the number of state agencies from 262 to 187. A section of civil servants are opposed to these fearing massive job losses.