Civil servants face sack as State seeks to trim wage bill

Thousands of civil servants will lose their jobs in the next three months if the Jubilee government keeps a promise it made to the International Monetary Fund (IMF) in July.

Though the exact number of workers targeted for retirement remains unknown, Treasury documents promise affected workers compensation for the early exit, saying money has been set aside for the exercise.

Newly released IMF documents show that the Washington-based institution also managed to get the government’s commitment to extend biometric registration of civil servants to the counties and parastatals as part of efforts to cut the public wage bill.

A similar exercise was conducted late last year for national government employees resulting in the removal of more than 12,500 ghost workers from the payroll. The deal also includes a freeze in public sector employment but excludes critical sectors.

“We will also extend to 2015/16 the freeze on new recruitment – except for exceptional services such as security, health and education – that was introduced in FY2014/15,” said Henry Rotich, the Treasury secretary.

Mr Rotich says in his communication with the IMF that “the next phase of the programme entails rationalisation and redeployment in the period July-December 2015 to establish options and incentives for voluntary separation, with a clearly specified budget for accelerated benefits, early exit compensations, and other facilities.”

The minister wrote the letter to the IMF which was countersigned by Central Bank of Kenya governor Patrick Njoroge. It is, however, the IMF that has made public contents of the agreements with the Kenyan authorities as part of its disclosure obligations.

Mr Rotich acknowledges in the letter dated August 31 that Kenya faced both external and domestic shocks as seen in the depreciation of the shilling and rising interest rates. More recently, the CBK has raise lending rates to cushion the local currency from rapid depreciation reducing foreign exchange reserves by more than Sh100 billion this year alone.

The employment freeze and biometric registration were first made public last year but there has been no indication of commitment to follow through.

Kenya’s total public wage bill – including ministries, departments, agencies, commissions, the disciplined forces and independent constitutional offices – is estimated at Sh568 billion or 11 per cent of the gross domestic product (GDP) compared to the global best practice of seven per cent.

At Sh568 billion, the public wage bill also stands at more than 50 per cent of total revenues against globally recommended threshold of not more than 35 per cent.

The wage bill for civil servants – excluding teachers, and the disciplines forces – stood at 5.6 per cent of the GDP at the end of June 2014 and the planned retrenchment is expected to bring this down to 5.1 per cent in the fiscal year ending June.

Mr Rotich says the agreed actions “would allow us to continue reducing wage spending to 5.1 per cent of GDP in 2015/16 compared to 5.6 per cent in 2013/14.” The wage bill has spiralled out of control since the onset of devolution as some counties ignored the rule that they only fill vacant positions.

Mr Kenyatta’s government has made initial steps in a parastatals reform plan that has seen a few merged, but the staff in the previously separate agencies continue to remain in employment.

The challenge of ghost workers is also plaguing many counties. When the Nairobi government registered its workers afresh last year, it found thousands of non-existent employees on its payroll.

Planning secretary Anne Waiguru last year revealed that the national government had 12,500 ghost workers earning Sh600 million in salaries and other emoluments every year.

READ: Union threatens to sue Waiguru over ghost workers’ layoff

The government’s recurrent expenditure budget has risen to the point where it has forced the development budget to fall below the 30 per cent specified in the Public Finance Management Act 2012.

In return for the conditions that the government has agreed to, the IMF has committed to lend Sh65 billion ($610.7 million) to be drawn whenever Kenya needs it for actual balance of payment obligation.

To further reduce recurrent spending, Mr Rotich says the government would establish legal and pension frameworks that allow the transfer of staff among counties and between ministries and counties.

“[We will also] renew contracts of staff only in cases clearly identified in the new government structure,” said Mr Rotich.

The minister says an inter-ministerial committee would be formed to carry out the retrenchment and rationalisation programme.
The IMF welcomed the commitment of the Kenya government “to persevere with efforts” to rationalise.

“They [Kenya] also reiterated their commitment to persevere with efforts underway aimed at rationalising the size of government, streamlining pay and allowances for civil servants,” said the IMF.