Report: How public servants' huge allowances lead to ballooning wage bill
By alex ndegwa and luke anami
| February 6th 2017
A report has exposed how over 600,000 employees in the public service have enjoyed lucrative allowances that account for 70 per cent of gross pay. The report also explains measures to control the rising wage bill.
The survey, commissioned by the Salaries and Remuneration Commission (SRC), identifi ed approximately 61 di? erent types of remunerative allowances payable to state and other public officers.
The study on allowances payable in public institutions by audit firm Deloitte explained that the public sector was even attracting employees from the private sector because "allowances have the effect of doubling 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," reads the draft report titled 'Wind of Change' submitted in August 2014 but whose contents have never been made public. The study sought measures to control the rising wage bill.
It cited how other countries had tamed spending on allowances, and recommends consolidation of some allowances, abolition of others and strengthening accountability processes especially for facilitative allowances.
"Rwanda, Tanzania and Ghana have classified allowances into at most five categories for easy management on their application. The remuneration practices in Kenya's public sector should focus more on allowances that would attract, motivate and retain public servants," the report observes noting that in Rwanda, all sorts of bonuses and allowances do not exceed 30 per cent of the basic grade-related salary.
"Reducing the number of allowances through consolidation or abolishing will have a ripple effect on the wage bill," says the report citing the Government's wage bill at Sh543.7 billion, or 54 per cent of all Government revenues.
Apparently, the findings prompted SRC in December 2014 to issue a circular reviewing critical allowances like house, hardship and subsistence that detailed the rates payable across various job groups.
But while implementation of caps on daily subsistence allowances was immediate, according to the circular, all other allowances reviewed were to be implemented in phases "beginning 2015/16 financial year as guided by the National Treasury through budgetary provisions".
The report by Deloitte also recommended a job evaluation of the public sector workforce to "support the restructuring of both remunerative and facilitative allowances obtaining in the public sectors".
SRC has just concluded a job evaluation of the civil service and recommended new salary scales alongside new pay.
The commission has also reduced public service positions from 26 to 19 and created five grades to cover all public service workers but the fate of those whose jobs have been merged is unclear.
According to the Deloitte report, "allowances in most job groups constitute almost 70 per cent of gross pay."
For instance, the lowest paid employees under job group A earn a basic salary of Sh7,701 according to an SRC report of 2010. But a raft of allowances total Sh26,486, which increases the gross pay to Sh34,188.
Equally, an employee in Job Group C with a basic salary of Sh8,804 pockets hefty allowances totaling Sh60,657. It means allowances as proportion of gross salary is 85.5 per cent.
The highest paid public servant in job group V pockets a monthly basic salary of Sh737,332. But their take-home is padded by generous allowances totalling Sh889,912.
This raises the monthly gross pay to Sh1,627,244. It means allowances as proportion of gross salary is 95.6 per cent.
Other top earners in job group T have a monthly basic salary of Sh228, 610. But they enjoy lucrative allowances totalling Sh836,854.
The monthly gross pay rises to Sh1,065,464. The allowances as proportion of gross salary is 78.5 per cent.
Other top earners in slightly lower job group S with a monthly basic salary of Sh156,895 rake in an extra Sh778,395 in mean total allowances. The allowances as proportion of gross salary is 83.2 per cent.
In Parliament, top earners in salary scale PSC 17 with a monthly basic salary of Sh874,000 raked in Sh637,600 in allowances, raising their gross salary to Sh1,511,600.
While SRC imposed a basic salary of Sh532,000 for MPs, the lawmakers eventually forced through a raft of allowances that ensured their take home was still generous.
Allowances payable to public officers in national security organs showed an officer in grade PG15 with a basic salary of Sh198,390 scooped allowances totaling Sh260,000, increasing the gross monthly pay to Sh458,890.
About 84 per cent of all employees of the public sector are in the lower paying job scales A to J. Top earners (16 per cent) are placed in the pay scale from K to V and they include permanent secretaries, professional managers serving in CBTs and independent commissions, ministerial officers and their assistants, and legislators and judges.
There are over 650,000 employees in the public service employed in public institutions including civil service; teaching service; national security organs; state corporations; the judicial staff; Parliament; Kenya National Audit Office; Controller of Budget Office; Office of Director of Public Prosecution; county governments; constitutional commissions; statutory committees/commissions/tribunals and public universities.
Job evaluations have not been done for national security organs and public universities because the SRC is yet to secure a consultant. But Parliamentary Service Commission (PSC) and Judicial Service Commission (JSC) have resisted the evaluation.
The report recommended the scrapping of the extraneous allowance paid to staff who work over and above the official working hours on a continuous basis.
The survey found the allowance is paid out to senior officers at the rate of Sh60,000 to Sh100,000 monthly depending on grade.
In addition, staff in the same grades also receive responsibility allowance at the rate of 20 per cent of basic pay, but the report concluded "the scope and purpose for these two allowances are similar" and "the jobs be evaluated and this allowance be considered for abolition".
Also recommended for abolition was the responsibility allowance paid at the rate of Sh2,000 to Sh500,000 depending on grade and level of responsibility.
The report recommended that responsibility allowance be abolished from the public service as it duplicates with that of extraneous allowance for the same staff grades.
Also to be scrapped was the instructor allowance payable to all instructors at a monthly rate of 25 per cent of basic salary.
Extraneous allowance payable to officers whose duties expose them to excess physical and mental stress and extended undefined long working hours currently paid to the Inspector General of Police and Commissioner General of Prisons, medical doctors and officers working in State House was also criticised.
The report recommended a job evaluation to assess the purpose of the allowance - and potentially be abolished.
The monthly rate for the allowance is Sh60,000 for Commissioner General, Sh800–Sh15,000 per month for the other staff; 20 per cent of basic pay for CID officers.
For MPs, the report found a responsibility allowance payable monthly at the rate of Sh78,000 to Sh150,000 but which conflicted with another for lawmakers who chair committee meetings - chairperson and vice chairperson, who are also entitled to sitting allowance at the rate of Sh15,000 and Sh12,500 respectively.
"It is recommended that committee chairpersons and vice chairpersons should be entitled to either special parliamentary duty allowance or committee/session sitting allowance and not both," the report recommends.
Deloitte established that allowances payable to all state officers at the county governments are uniform since they follow the SRC circular. Payment of allowances for other public officers is guided by the Muthaura circular and collective bargaining agreements (CBAs).
Top earners in the counties in job group T earn a basic salary of Sh302,980 and allowances totalling Sh145,000, raising the gross pay to Sh447,980.
Those in Job Group S with a basic salary of Sh180,660 pocket an additional Sh173,000 in allowances raising the gross pay to Sh353,660.
All across the study groups, Deloitte observed that the parliamentary service group consistently enjoys the highest commuter allowance across all grades and is an outlier.
"Independent commissions and judicial service are spending on average 52 per cent and 60 per cent respectively more on remunerative allowances than the budgeted remunerative allowances amount," the report states.
"The parliamentary commission also spends 14 per cent more than the budgeted amount," it adds.
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