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Economy

Governors gain as MPs and senators lose in pay review

Finance minister Njeru Githae with Mrs Sarah Serem, chairperson of the Salaries and Remuneration Commission,  during the launch of the proposed pay structure for State officers at KICC on Tuesday. Photo/PHOEBE OKALL
Finance minister Njeru Githae with Mrs Sarah Serem, chairperson of the Salaries and Remuneration Commission, during the launch of the proposed pay structure for State officers at KICC on Tuesday. Photo/PHOEBE OKALL  

Kenya’s fourth president, his deputy and Members of Parliament were among the biggest losers as the government moved to ease the public sector wage bill burden with the release of a new pay scheme for State officers.

But the new pay plan that the Salaries and Remuneration Commission (SRC) released Tuesday confirmed the big clout that county governors will have in the new dispensation where they will take home a gross pay of Sh1,111,673 – nearly the same as Cabinet Secretaries and the Chief of the Defence Forces.

The salaries team headed by Sarah Serem has cut the president’s gross salary to Sh1.75 million down from the current Sh2 million. Kenya will hire the deputy president on a gross pay of Sh1.48 million down from the current Sh1.93 million according to the new scheme that Mrs Serem is expected to save the Exchequer Sh500 million annually.

MPs, hugely unpopular for awarding themselves hefty salaries and allowances in recent years, have suffered the biggest blow with a cut in their gross pay to Sh740,927 from the Sh851,200 that members of the 10th Parliament earned.

The biggest blow to the MPs take-home however lies in the fact that the their gross pay is now fully taxable unlike in the past when the taxman was limited to having a share of the Sh200,000 basic pay allowing the legislators to walk home with more than Sh600,000 tax-free.

With income tax standing at the rate of 30 per cent, MPs are bound to take home less than Sh520,000. 

Those running for Senate positions, however, appear to have suffered the biggest blow having been left in the same pay scale as their counterparts in the lower house despite the fact that they will represent the same territory as governors.

“We are introducing relativity in the Public Service pay scheme. This should translate into improvements at the lower levels as we cut back at the top or maintain what is there at the same level,” Mrs Serem said when she launched the new scheme in Nairobi.

Charles Nyachae, the chairman of the Commission on the Implementation of the Constitution (CIC), is among the top public officers who are headed for leaner times under the new pay scheme. He will earn a salary of Sh1.08 million down from the current Sh1.24 million, translating to a net pay of about Sh700,000.

Mr Nyachae’s pay was the subject of heated exchanges with MPs after he opposed the legislators’ attempts to increase their pay in the dying days of the 10th Parliament.

MPs hit out at Mr Nyachae for pushing the State into paying him a salary that is higher than that of chairpersons of other independent commissions such as the Commission on Revenue Allocation (CRA) and the Independent Electoral and Boundaries Commission (IEBC).

The salaries commission has firmly dealt with the matter, putting Mr Nyachae at par with IEBC chairman Ahmed Issack Hassan whose pay will rise to Sh1.08 million, up from the current Sh874,720.

Mrs Serem also took good care of her pockets after more than doubling her pay to Sh750,000 from the current Sh330,000, putting her at par with the chair of the Commission on Revenue Allocation (CRA), Micah Cheserem.

Heads of other commissions including the Public Service Commission (PSC), Teachers Service Commission (TSC) Transition Authority (TA), Ethics and Anti-Corruption Commission (EACC), the Kenya National Human Rights Commission have all been placed on the same salary of Sh750,000.

Judicial officers topped the list of winners under the new pay structure that has lined up Chief Justice Willy Mutunga for a Sh1.38 million gross pay compared to Sh1.27 currently. His deputy will earn Sh1.09 million up from the current Sh1 million placing her at par with the Attorney-General.

Mrs Serem said the new pay structure is expected to save the government at least Sh500 million per year from the pay roll of the 3,670 State officers and about Sh1.7 billion annually when all perks, including allowances not factored in the payroll, are revised.

State officers’ wages account for about three per cent of the public wage bill. “Such a coordinated process will address issues of disparity, equity and affordability that have for a long time persisted in the public service,” she said.

Kenya’s public sector wage bill has surpassed fiscal and economic benchmarks, consuming resources that should be set aside for development.

“The current wage bill is neither affordable nor sustainable,” she said as she pushed for radical measures, including a freeze on public sector employment, a crackdown on ghost workers and revision of roles and duties to eliminate duplication.

SRC statistics show that the estimated public sector wage bill for the fiscal year 2012/13 has hit 457.5 billion, a whopping 30.2 per cent of the Sh1.51 trillion national Budget.

The pressure is also intense on the revenue side where the central government’s wage bill is consuming about 35 per cent of the total revenue and the servicing of public debt took up 17.2 per cent of the revenue in the past nine years leaving only 48 per cent for other obligations.

Linking the bloated public sector wage bill to the fiscal and monetary policy challenges Kenya has faced in the past five years, Ms Serem said drastic measures need to be taken to keep the economy on track.

“The higher the wage bill to revenue the more vulnerable an economy becomes since less domestic resources become available for public investment,” she said.

Finance minister Njeru Githae said a harmonised pay structure will ease budgetary pressure on the government as it embarks on resource intensive activities such as the establishment of county governments.

“The adoption of this framework signifies a paradigm shift in the management of the public sector wage bill in Kenya,” he said.

The public wage bill has increased steadily in the recent past growing at an average rate of 13 per cent in the past three years.

The wage bill rose by 30 per cent in the current financial year, driven by hefty awards to teachers, lecturers, health workers and the police.

Mrs Serem said the public would be required to air their views on the proposals by March when a series of forums planned to take place across the country will be concluded. The first public hearing is planned for Nairobi on Thursday.

But even before the hearings commenced, Industrialisation permanent secretary Cyrus Njiru called for caution in setting the terms of services.

Mr Njiru and Treasury PS Joseph Kinyua are among permanent secretaries who face a pay cut from Sh1.5 million per month to Sh910,000 under the new scheme.

“We have to be careful to avoid a situation where we cannot attract and retain the best of the best through rigid terms,” he said at a plenary session during the launch of the new structure.

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