Audit unearths payslip crisis in public sector

The crisis has been triggered by President William Ruto’s aggressive revenue-raising measures, including the Pay As You Earn, housing levy and deductions to the newly established Social Health Authority.

The result has been a massive raid on workers’ payslips, leaving many with dangerously depleted earnings.

A fresh review by the Star of new audit reports by Auditor General Nancy Gathungu lays bare the scale of the problem in state corporations: no fewer than 3,800 employees took home less than one-third of their salary in 2024.

But this is just the tip of the iceberg.

Earlier reports revealed an even graver situation across the broader government, particularly in the security and interior sectors.

At least 47,300 workers had deductions that exceeded legal limits—with police officers the hardest hit.

More than 36,600 members of the National Police Service had overcommitted their payslips.

Thousands of others were affected at the Interior ministry, Kenya Prisons Service, Immigration Department, Treasury and the Social Protection docket.

The Employment Act of 2007 is clear: no employer is allowed to deduct more than two-thirds of an employee’s salary at any one time.

But that provision is now widely flouted.

“The affected staff members may cause pecuniary embarrassment to the reputation of the company,” Auditor General Gathungu warned, citing numerous agencies for breaching the law.

Human resource experts say an employee with overcommitted payslip may not be productive as their focus could be on side hustles.

In her latest audit, Gathungu paints a dire picture of parastatals drowning in payroll crises due to rising statutory deductions and loan obligations.

At the Kenya Post Office Savings Bank (Postbank), 361 out of 481 staff—equivalent to 66 per cent—took home less than a third of their pay.

Shockingly, 16 of them received less than Sh1, 000 per month.

The Tea Board of Kenya had one of the worst cases, where several staff took home nothing and five others earned below the legal threshold.

Other affected institutions include Kenya Power, with more than 1,100 workers in violation, the Judiciary (551 staff), National Health Insurance Fund, now the Social Health Insurance Fund (625 staff), Agriculture Finance Corporation (248), Energy and Petroleum Regulatory Authority (185), National Industrial Training Authority (114), National Land Commission (71).

Others are the Kenya Meat Commission (79), Kenya Medical Research Institute (65), Agriculture and Food Authority (88), Kenya Institute of Mass Communication (19), Controller of Budget (20), Salaries and Remuneration Commission (21), Kenya School of Government (27) and National Environmental Management Authority (35).

The situation is exacerbated by mandatory contributions rolled out in 2024—1.5 per cent to the housing levy and 2.75 per cent to Shif.

 In March 2025, new National Social Security Fund rates were also implemented, further squeezing workers’ net pay.

At Geothermal Development Company, management admitted the deductions were a result of mandatory statutory levies.

Public Service Commission, the watchdog over government compliance, also breached the law – 69 of its staff were found to have exceeded the legal deduction limits.

Without urgent intervention, the crisis could deepen.

“The challenge is that at one million workers, the wage bill is already high. This means we have to think about how to increase revenue collection,” Public Service Cabinet Secretary Geoffrey Ruku said recently.

He added that without increased revenue, fair compensation for public officials remains out of reach.

Insiders in some of the affected agencies described widespread frustration, with many resorting to informal lenders.

“Most of us are borrowing from shylocks to survive. We have people with negative pay,” an officer from one of the worst hit institutions said in confidence.

Economists warn that the only sustainable way out is to either increase salaries or restructure the deductions.

 Kitui Central MP Makali Mulu, himself an economist, told the Star: “Pay must be indexed to inflation. It should be higher than the inflation rate.”

A reform push by MPs through the Public Accounts Committee last November, in collaboration with the National Treasury, has so far yielded little.

Some lawmakers are now calling for a policy rethink, arguing the state cannot dictate how employees spend their salaries, especially in a credit-driven economy.

The revelations come at a politically sensitive time for President Ruto’s administration, already facing public fury over punitive tax policies and economic hardship.

Embakasi Central MP Benjamin Gathiru blamed government waste.

 “When workers take home less than Sh1,000, we are not talking about austerity but economic cruelty,” the MP, a close ally of former Deputy President Rigathi Gachagua, said.

The PSC has recommended staff audits in struggling parastatals, but without accompanying revenue growth, experts warn the next logical step could be layoffs.

What’s clear is that a systemic liquidity crisis is at hand—fuelled by a combination of poor pay, high taxation and mounting statutory deductions that have eroded the dignity of public service.

INSTANT ANALYSIS:

The parastatal crisis is no longer just a payroll issue but a litmus test for the social contract between government and workers. President William Ruto’s administration has pushed for higher taxes to reduce the public debt, but protests have forced reversals, such as the withdrawn Finance Bill of 2024.