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Treasury forecasts squeeze on salaries in budget balancing plan

The government plans to reduce the wage bill. FILE PHOTO | NMG
The government plans to reduce the wage bill. FILE PHOTO | NMG 

The Treasury targets to lower the weight of the wage bill on national revenue by seven percentage points within the next five years, pointing to a squeeze on salaries and allowances even as it grapples with rising demand from labour unions.

It plans to slash the wage bill to 28.9 per cent of national revenue in the current fiscal year from 30.2 per cent in the year to June, and further lower it to 23.2 per cent by June 2020/21.

Data shows that payout to national government workers has increased over the years. Pay to civil servants increased from Sh307.4 billion in 2015/16 to Sh336.6 billion in the year to June 30. The Treasury expects it to rise steadily to Sh464.1 billion in the year ending June 2021.

The national government’s ordinary revenue has similarly increased from Sh968.6 billion in 2015/16 to Sh1.116 trillion in the year to June 30.

The Treasury expects the annual ordinary revenue collection to grow at a slightly higher pace to hit Sh2.003 trillion by 2020/21.

The law requires that expenditure on compensation of employees, including benefits and allowances, be kept at no more than 35 per cent of the national government’s equitable share of revenue raised nationally.

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