Kenya Kwanza's approach to the wage bill crisis could be better

**President William Ruto and SRC Chair Lynn Mengich during the Third National Wage Bill Conference in Bomas of Kenya.** [PCS]

Last week the government spent time and money discussing its wage bill crisis. Between decades, the wage bill tends to be ignored, until it is recalled in ten-year intervals.

Twenty years ago, the National Rainbow Coalition (Narc) faced a wage bill crisis following Kanu’s “handover note” in the form of a massive pay increase for teachers. A decade ago, it was the Jubilee administration arguing “wage bill” when the self-same teachers loudly returned to the negotiating table.

Today, struggling to handle health workers strike following Jubilee’s own “handover note” otherwise known as the 2017 Collective Bargaining Agreement, the Kenya Kwanza administration is - in its “we can no longer live beyond our means” language - singing the same wage bill tune.

Of course, the Salaries and Remuneration Commission (SRC) dismissed our current moment of worker unrest in the health sector as completely unrelated to the 3rd Wage Bill Conference.

To be clear, this was a conference attended and addressed by our highest paid public “fat cats” to discuss the national crisis of our unaffordable wage bill. This is how we do it in Kenya. Einstein once said, “you cannot fix a problem with the same thinking that created the problem”. Kenya’s version reads, “we are the same people who are the problem who say we can fix the problem”.

Yes, this is harsh. Let’s look at two things. What this “fat cat” conference resolved. And the missing big picture. On bureaucratic paper, the conference’s ten resolutions are sensible. They also reveal much about our state of governance. Let’s take a quick peek at these resolutions.

One, all government agencies must achieve the 35 per cent wage bill to revenue proportion (47 per cent in 2021/22, 43 per cent in 2022/23) by June 2028. Hello, this benchmark is established in our Public Finance Management regulations, which presumably have the force of law.

Are these benchmarks (remember, we were around 54 per cent about ten years ago) a proposal or a mandatory requirement? Why do we treat the constitution, statutes and susbisidary legislation as mere suggestions? Two, all counties (aren’t these government agencies?) must also achieve this 35 per cent benchmark. Same questions as above plus, is their own deadline immediate? Why?

Three, public service institutions must review and rationalise their staff numbers to align with fiscal sustainability. Again, hello? Don’t we already have institutional strategic plans aligned with the Bottom-Up Economic Transformation Agenda, Fourth Medium-Term Plan (MTP IV) and the Medium-Term Expenditure Framework? Aren’t these strategic plans already staff-aligned? Eish!

Which brings us to the fourth resolution to review Kenya’s model of performance management by December 2024 (mid-financial year which means any new model comes into effect in 2025/26). As SRC has correctly observed, our current performance management model emphasizes process (doing things) over performance (delivering results). But what does this mean for those shiny 2023/24 performance contracts signed at State House, or those forthcoming for 2024/25? Also, don’t forget, performance contracts follow strategic plans, but see the third resolution.

At this point, we begin to see the larger picture in this debate.

Next, we might innocently assume that performance contracting is an established practice across all of government. The fifth resolution confirms this is not yet the case by directing all institutions in the national and county government to adopt it as an accountability tool by June 2024.

If you thought that was bad, then consider the sixth resolution requiring all national and county institutions to migrate their payrolls to the (official) Human Resource Management Information System (HRIS-Kenya) by June 2025 (that is, the end of the next financial year). Can we please put someone on a performance contract for this item alone to get us out of the HR stone age?

Resolution seven seeks to eliminate duplication and mitigate overlaps of mandates, roles and functions across all agencies. Unlike the first six, it doesn’t actually say who or which institution will do it, which is exactly why it is more than likely not to happen (nobody wants to give up their institutional power willingly). I will return to this resolution later in this article.

As I shall regarding the eight resolution that seeks – again without saying whom – to initiate a government wide cultural transformation to embed our Article 10 national values and principles.

Though it is worth reflecting on the notion that the transformation might also need to be national given that the tenth resolution requires all government employees with fake certificates to resign before the end of the year. Fakery might manifest itself most publicly in government, but it is fast becoming a societal proclivity. And then what after resigning? No consequences or sanctions?

For the record, the ninth resolution is to submit the other nine resolutions to the National Summit (Presidency and Governors) to constitute a team to implement the same resolutions.

Conference costs

This was the outcome of our third wage bill conference. If we exclude the opportunity costs of fat cat time spent in the conference rather than service delivery, and add the costs incurred in getting “out of Nairobi” fat cats into town to the costs of hosting and running this jamboree we are probably looking at enough to pay anything between 100 and 500 medical interns for a month.

Mostly, however, these resolutions tell us that our governance is weak – we don’t get stuff done that we should have done even before this conference. And, in true fat cat fashion we heard nothing this week about two important issues: pay inequity and multiple allowances. Simply, the people in attendance at this conference to fix these issues are the main beneficiaries of pay inequity (job evaluations notwithstanding) and the chief consumers of pay-doubling allowances.

This is not to say that the wage bill sustainability is not important. The president’s closing address made an important point – the current Sh1.1 trillion wage bill reflects a 62 per cent establishment, suggesting that it would be Sh1.8 trillion is all vacant posts were filled (making the wage bill 82 per cent of revenue). What remained unsaid, was that the authorised staff establishment (all posts to be filled) is not even close to what it would be if we used international staffing norms.

Let’s use this thought to conclude differently by painting ourselves a bigger and longer picture.

If we used these developmental norms for our core health, education and policing (health worker to patient/population, student to teacher, police to population ratios) we might require a wage bill of, say, Sh3 trillion. At 35 per cent of revenue, our revenue need is Sh8.5 trillion, which at 25 per cent of GDP, suggests an economy rocking at Sh34 trillion.

In other words, these are the long-term bottom-up goals that reverse the short-termism in today’s wage bill debate. Remember, we are a developing country with huge unmet development and service delivery needs on one hand, and a largely nascent productive and competitive indigenous private sector.

In this reversal of thinking, job cuts do not arise. Instead we go back to the seventh resolution of the conference and reimagine government along the vision above and our constitution. We take more time to not just fix mandates, roles and functions, but the outstanding stock of pre-constitutional policies, laws and regulations that still exist in our books for reasons unknown.

We take a fresh view to government as policy, service delivery, participation and accountability. In doing this, we infuse the sort of process thinking that keeps private sector innovative, and avoid the thought paralysis that thinks structures, staffing and wage bills. Forgive the word salad here, but this is where we fix the engrained misgovernance we have – between mandates/roles on one hand and structures/functions on the other, we fix processes. This is our reform gap.

Then there’s the software part implied by the eighth resolution on cultural transformation. If policy, service delivery, public participation and accountability are government’s four basic roles, they must be supported by three capacity-sets: process-systems-technology (hence a process view), structure-skills-staffing (structure from process, then staff from skills) and shared values-culture (from ethics and integrity to performance orientation to leadership action and style).

In doing this, we must build on past stand-alone initiatives such as rapid results and service delivery frameworks as the President noted. As we move from abstract service charters to measuring actual citizen satisfaction with their customer journeys.

Which brings us to closing thoughts. Was the third wage bill conference worth it? Despite the mild criticism offered here, it elicited useful discussions across our media, particularly from a fiscal and economic perspective.

This hasn’t been the typical “the IMF wants to sack people” discourse, despite post-conference media scaremongering. My take is it presages the bigger, home grown, transformation imperative for our public sector as a socio-economic facilitator and enabler.

So here is Resolution 11: Roll out a larger Public Service Reform and Transformation Strategy.

That’s Kenya Kwanza’s politics and governance coursework for its second 18-month semester.