AUSTERITY

State targets allowances to tame wage bill

On Monday, National Treasury said it is aiming at cutting the country's wage bill to 7.5 per cent in next five years to meet international benchmark for sufficient fiscal space.

In Summary
  • Total amount paid in allowances last year hit Sh322 billion from at least Sh130 million in early 1990s
  • Allowances in the public sector has significantly increased to a whopping 247
SRC boss Lyn Mengich.
SRC boss Lyn Mengich.
Image: EZEKIEL AMING'A

Public sector allowances hit a high of 247 last year up from 39 in the 1990s, and the government is now grappling with how to cut and streamline them.

Tha Salaries and Remuneration Commission (SRC) now wants a policy in place to streamline management of the allowances which accounts for 40 per cent of civil servants wage bill.

This is among the 15 resolutions arrived at the three day national conference on public wage bill that was closed yesterday by the  Public Service cabinet secretary Margaret Kobia in Nairobi.

 
 

The country currently spends Sh48 for every Sh100 collected by Kenya Revenue Authority to pay government employees, pushing up total wage bill to Sh795 billion or 7.9 per cent of Gross Domestic Product.

Total amount paid in allowances last year was Sh322 billion compared to at least Sh130 million in early 1990s.

SRC chair Lyn Mengich said the policy framework on allowances will come up with a standard measure for other allowances apart from house and transport allowances.

''It will determine basis for allowances and set a standard measure to bridge allocation gap different job groups,'' Mengich said.

Although the bill has recently declined from 57 per cent of revenues in 2013 to 48 per cent this year, the state has a target of reducing it further to 35 per cent, as set out in the Public Finance Management Regulations (2015).

On Monday, National Treasury said it is aiming at cutting the country's wage bill to 7.5 per cent in next five years to meet international benchmark for sufficient fiscal space.

The conference also resolved to development a National Productivity Policy and Public Sector Productivity Index to measure employees' input against output.

In his presenting on work ethics, Ludeki Chweya, director Kenya School Of Government said there is a high absenteeism and laziness in government agencies significantly lowering productivity.

According to World Bank country director Carlos Felipe Jaramillo,  improved public sector productivity levels will  contribute to higher GDP and subsequently transform Kenya’s economy.

The conference also resolved to set a date for implementation of Public Service Superannuation Scheme Act on contributory pension scheme which has been idle since 2012.

The contributory scheme is expected to ease pressure on the country's pension liability currently standing at Sh1 trillion.

The annual pension bill has also been on the rise, with more public servants reaching the mandatory retirement age of 60, increasing from Sh27.9 billion in 2013-14 to Sh65.1 in 2017-18.

The conference further resolved to establish a framework for collective bargain agreement and institutionalise alternative dispute resolution management to efficiently resolve labour disputes.

A multi governmental task force is also to be set to all resolutions are met even as critics question the government's commitments to its promises.

''We are good in making resolutions the problem is implementation. I hope all leaders who are here are committed to execute and improve on these resolutions,''council of governors' chair Wycliffe Oparanya said.