Productivity, not austerity, is Kenya's real fiscal solution

Kenya's long-standing debate on the public wage bill should move beyond focusing solely on salary expenditure.[File, Standard]

Kenya’s public finance debate has for years revolved around one recurring issue: The wage bill. Every budget cycle, concerns emerge over the sustainability of public expenditure, the size of government payrolls, and the pressure placed on ordinary revenues. Yet, while the conversation has been loud, it has often been incomplete.

The real question is not simply how much the government spends on salaries. The more important question is whether the country is receiving commensurate productivity, performance, and service delivery from that expenditure.

That is why the forthcoming National Productivity and Performance Conference 2026, convened by the Salaries and Remuneration Commission (SRC) and other stakeholders, could not have come at a more critical moment for Kenya’s economic future. The conference, themed 'Productivity for fiscal sustainability and efficient service delivery,' seeks to fundamentally shift the national conversation from wage bill containment to a broader and more strategic discussion about productivity, accountability, innovation, and public sector performance.

Under Article 230 of the Constitution, SRC is mandated not only to ensure equity and fairness in public remuneration but also to recognise productivity and performance in public service compensation systems. That constitutional requirement is often overlooked. Public compensation cannot sustainably exist in isolation from public productivity. The data tells an important story.

Kenya’s wage bill to ordinary revenue ratio has gradually declined from 54.77 per cent in FY2020/21 to a projected 40.68 per cent in FY2025/26. This reflects ongoing fiscal reforms and improved discipline across government. However, the ratio remains above the 35 per cent threshold prescribed under the Public Finance Management Act.

At the same time, public sector employment has continued to rise, growing from approximately 885,000 employees in 2020 to over 1.07 million employees by 2025. Naturally, citizens expect that increased staffing should translate into faster service delivery, better governance outcomes, improved revenue mobilisation, and greater institutional efficiency.

This is where the productivity conversation becomes unavoidable. Globally, countries that successfully transformed their economies did not merely cut costs. They invested in productivity systems, performance management, technological modernisation, skills development, and accountability structures.

Singapore, today ranked among the world’s most productive economies, deliberately linked public sector efficiency, economic planning, and performance management to national development outcomes. China’s remarkable economic rise was similarly anchored on productivity-driven reforms, institutional discipline, industrial modernisation, and strategic public administration.

Kenya must now ask itself a difficult but necessary question: Can we continue expanding public expenditure without equally expanding public sector productivity? The answer is clearly no. Productivity is not about overworking employees or reducing workers to statistics. It is about improving the output-to-input ratio. It means producing better results with available resources. It means faster service delivery, reduced wastage, stronger accountability, smarter systems, improved tax administration, effective use of technology, and better citizen outcomes.

Ultimately, the debate should not be whether Kenya’s wage bill is large or small. The real debate should be whether public expenditure is translating into measurable national value.

Mr Abdullahi is Salaries and Remuneration Commission CEO