Pay raises push civil servants ahead of private sector
Customers queue at National Bank branch in Nairobi (right) and at the Kenya Power and Lighting Company offices in Nairobi. A recent survey of Kenya’s labour market revealed that best-paying employers are institutions where the government has a controlling stake such as the KPLC and National Bank of Kenya.
Civil servants last year earned better pay than their private sector counterparts in what marks the biggest labour market shift in more than three decades.
Public servants took home an annual average pay of Sh394,131 compared to private sector employees’ Sh393,760, according to official data contained in the Economic Survey 2011, which was released last week.
The change in fortunes of government employees is partly attributed to the reforms that the Kibaki administration has pursued since coming to power in 2003.
Key tenets of the reforms effort have been the introduction of private sector practices such as competitive hiring of top level civil servants and parastatal heads, performance-based pay and contracting that has seen a large number of professionals leaving the private sector for government with competitive salaries. “We have seen the government tap into the experienced private sector workforce to fill in middle and top level positions with the offer of improved employment terms,” said Mr Francis Muhindi, the group managing director at Manpower Services East Africa.
Mr Muhindi said improved pay together with the job security, guaranteed pensions and health insurance had significantly raised the competitiveness of public sector employment.
Ms Jacqueline Mugo, the chief executive at the Federation of Kenya Employers (FKE) said the government has had to hire the best talents to execute the reforms needed to lift the country’s profile as an investment destination.
“The government needs the best brains in the market to initiate reforms, which would cut the cost of doing business in the country,” said Ms Mugo, adding that the private sector still offers special benefits such as use of company cars and insurance that are difficult to quantify.
Some labour market observers, however, attributed the change in fortunes of government employees to the relative strength of public sector trade unions such as Kenya National Union of Teachers (Knut) and their ability to negotiate better pay with the government.
Together with the core civil service employees, teachers top the list of Kenyan workers who have received the most pay increments in the past eight years, causing a general rise in the public sector wages.
Mr Tom Odege, the secretary-general of the civil servants’ union, said the salary reviews had, for example, multiplied the least paid workers’ pay three-fold since 2002.
That pushed the public sector wage bill up at an annual average rate of 36 per cent in the past five years to Sh262 billion compared to the private sector’s Sh550 billion, despite creating the least number of new jobs.
The government had 663,4000 employees last year, having created only 13,500 jobs in five years compared to the private sector, which created 190,000 jobs during the same period for a total of 1,397,000 in 2010.
The lowest paid government employees now take home a basic salary of Sh8,000 up from Sh3,000 nine years ago — a factor that has helped raise the average wage to Sh32,909.
Official statistics show that the average private sector worker took home a monthly salary of Sh32,813.
Mr Noah Chune, an economist at the Central Organisation of Trade Unions (Cotu), blamed the private sector’s heavy reliance on casual labour for the lag in salary growth.
“We have limited capacity to ensure that employers meet the minimum wage requirements,” said Mr Chune, adding that the government had undertaken a number of reforms that had improved employee welfare.
Casual employees are often barred from joining trade unions, making it hard for them to benefit from collective bargaining agreements negotiated by the unions.
That also partly explains the sharp decline in the number of collective bargaining agreements to 266 last year, compared to 297 in 2009.
Kenya National Bureau of Statistics data also shows that the surge in inflationary pressure eroded real wages by a cumulative margin of 11 per cent since 2006, when civil servants earned a monthly average income of Sh24,579 compared to the private sector’s Sh27,311.
This year, Cotu has been demanding a 60 per cent increase in the minimum wage – a proposal that has been vehemently opposed by the employers’ lobby, FKE.
Labour economists say increased spending by the government on workers’ pay is the result of an evolution in the job market that has put the public sector in direct competition with the private firms for skilled workers.
“The government is finally appreciating the value of top talent and is ready to pay for it,” said Sammy Onyango, the chief executive of consultancy firm- Deloitte East Africa.
“Pricing in the labour market like all the others is determined by the demand and supply,” said Mr Onyango.
Kenyan wages are expected to continue rising in the medium as the private sector ups its game to match the public sector to retain key talent. Unlike the private sector where pay is often tied to skills, experience and profitability, the government has an almost free hand in determining its wage bill – slanting the competition in its favour.
Employers have since 2007 slowed down wage increments, citing the multiple shocks from the 2008 post-election violence and the global economic crisis and their effect on have affected productivity and profitability.
A severe drought since the last quarter of 2010 has already dented the fortunes of the agriculture sector - a key driver of the economy, making analysts to downgrade growth projections to about four per cent (5.6 per cent 2010).
In the mean time, the government has established a pre-defined scale that details the annual wage rises for its employees in addition to automatic promotion in job after serving for a given length of time.
“Unlike the private sector where salary reviews are pegged on the performance of the employee, the State has a pre-defined ladder that dictates workers’ remuneration,” said Mr Onyango.
Employers are now running the risk of investing in the training of their staff, only for the government to poach them with better pay packages.
A recent survey of Kenya’s labour market revealed that best-paying employers are institutions where the government has a controlling stake such as the Kenya Power and Lighting Company and National Bank of Kenya.
The high payout in these companies is possibly linked to the workforce that they have had to recruit to execute the turn-around strategies from their once loss-making positions.
In both private and public sectors, workers in the agriculture and forestry, and mining pocketed the least pay because the labour force in the respective fields is largely unskilled.
