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How other countries have dealt with controversial public service allowances

By Luke Anami | February 6th 2017

A study on allowances payable in public institutions shows that Kenya has 60 remunerative allowances.

It also cites countries like Malaysia, India and Rwanda as having adopted some of the best practices to reduce their wage bills.

The Study conducted by Deloitte noted that the Malaysia Public Administration Country Profile, developed in November 2005, revealed that remuneration consists of salary, fixed allowances and variable payments such as housing and critical services allowance.

Public services personnel are also provided with various benefits such as medical treatment/hospitalisation and quarters for certain essential service like the Fire Service and Police Force.

The objective of such remuneration is to ensure public servants receive fair and reasonable wages and compensation in carrying out their duties.

India's basic pay consists of basic salary and allowances, which are reviewed every six months and worked out at 15 per cent of the basic salary.

Allowances including house, transport, professional for doctors, military service, and remote areas (hardship) vary from one city to another thereby controlling the overall wage bill.

Selective bonuses

Bonuses are only paid to Grades C and D (support staff) and supervisors. However, this has been replaced by performance-related initiatives (PRI).

Rwanda's allowances and bonuses has been reduced to the lowest level since allowances do not exceed 30 per cent of the basic grade-related salary.

Rwanda pays what is referred to as individual performance allowance, which is annually determined and subjected to each civil servant's performance appraisal.

It is paid once in a year to a most deserving civil servant in each institution and job category. For instance, a well performing driver, technician, professional staff or unit director) and is equal to at least a one month salary.

The granting of house and vehicle is strictly linked to very restricted job positions; high political functions, higher State jobs.

Regarding the means of transport, only some high administration job holders enjoy it. The grant of such benefits is exclusive from the corresponding allowance.

Determination of beneficiaries of these allowances is clearly supported by appropriate legal provisions.

Rwanda, Tanzania and Ghana have classified allowances into at most five categories for easy management on their application.

Thus the empirical studies from other countries reveal common trends of allowances payable in the public service and the impact on the national wage bill.

Countries cited in this study have instituted deliberate strategies such as consolidation of some allowances into basic pay, harmonisation of allowances and salaries of public officers to ensure equity among employees; restructuring and/or abolition of allowances and strengthening accountability processes especially for facilitative allowances.

The report recommends that remuneration practices in Kenya's public sector should focus more on allowances that would attract, motivate and retain public servants.

"However, there must be clear criteria for determining allowances across the entire public service. Implementation of a national remuneration and benefits policy that is guided by the key principles of objectivity and impartiality, equity, competitiveness and performance driven among others is likely to cause a transformation on remuneration practices in the public sector," the report says.

International practice

This is against the international world practice where allowances have been rationalised to reduce the wage bill.

"There are currently over 60 remunerative allowances obtaining in the public service," says the report which was authorized by the Salaries and Remuneration Commission in 2014.

"Reducing the number of allowances through consolidation or abolishing will have a ripple effect on the wage bill," it reads.

Kenya has one of the highest number of paid allowances categorised as remunerative at 62 and facilitative at 30 making the public wage bill one of the highest.

Thus Kenya's 49.3 per cent of the wage bill can be explained by the huge number of allowances.

The study suggest that there is a significant positive relationship between the number of remunerative allowances paid and gross salary.

This implies that the higher the number of remunerative allowances paid the higher the gross salary of an employee.

"The gross salary, therefore, gets even higher or lower depending on the rate of the individual allowances," the report adds.

The findings also show that rates of individual allowances notwithstanding, institution with long list of allowances on average have higher gross pay than the rest.

The results also showed that disparities exist in terms of rates payable across the sample study group. For instance, some study groups pay house allowances significantly higher or lower than others within the same job groups.

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