Members of Parliament will walk away with Sh6.7 million each at the end of their term next year, drawing from the Sh2.8 billion that the Treasury has allocated to pay their service gratuity.
The hefty payout will bring to a close the five-year bonanza that the MPs — including senators and members of the National Assembly — have been enjoying since they arm-twisted the Salaries and Remuneration Commission (SRC) to let them earn unlimited allowances for committee sittings.
It is also the latest demonstration of the heavy burden that taxpayers have carried to keep a pampered and bloated government afloat.
It would take 51 years for a Kenyan — whose average income stood at Sh131,504 last year — to make the Sh6.7 million each MP will take home at the end of their term.
The service gratuity amounts to nearly 80 per cent of an MP’s annual basic pay, which has grown to Sh8.5 million.
The one-off compensation was one of the key items that remained unresolved after the legislators forced the SRC to give them a fresh pay package with no ceilings on allowances.
The SRC in March 2013 gazetted a remuneration package for MPs that included a gratuity benefit calculated at the rate of 31 per cent of annual basic pay to be paid at the end of their term.
The pay schedule also capped allowances, infuriating the legislators who in the end managed to have the SRC issue a new pay structure that left their allowances open-ended.
The commission had capped all their allowances at 40 per cent of their gross basic pay while applying limits to specific stipends.
A chairperson of a committee, for instance, was to earn a maximum of Sh160,000 per month in allowances while other committee members were to draw a maximum of Sh80,000 per month each.
Allowances not specified in the gazette were also to be scrapped. The document sparked outrage among the legislators, forcing the SRC to issue a new pay structure in June 2013 that effectively opened the door for the MPs to make as much as they could through allowances.
The SRC said at the time that differences over the payment of gratuity had not been resolved and promised to release an advisory at a later date.
“Payment of service gratuity to be advised at a later date by the Salaries and Remuneration Commission,” the commission wrote to National Assembly Speaker Justine Muturi in the June 11, 2013 letter detailing the revised pay package of MPs.
The new pay schedule retained the initial basic pay for MPs starting at a gross monthly salary of Sh532,500 per month and rising by Sh44,375 each year to terminate at Sh710,000 in the final year.
It also gave MPs a Sh5 million car grant, raising it by half compared to the 10th Parliament’s Sh3.3 million.
The concessions made to the legislators deeply undermined SRC’s mandate and exacerbated the growing public sector wage bill that has forced the government to borrow more and raise taxes, saddling households and businesses with a heavy tax burden.
The 2010 Constitution nearly doubled the size of Parliament to 416 members, partly through the creation of the Senate.
The National Assembly now has 290 elected MPs, 47 women elected from the counties and 12 nominees of political parties, bringing the total to 349 members.
Senate has 47 elected members, 16 women nominated by political parties and four representatives of the youth and persons with disabilities, bringing the total membership to 67.
The Report of the Working Group on Socio-Economic Audit of the Constitution of Kenya, 2010 calls for a reduction of the legislators’ pay, among other cuts, to make the running of government sustainable.
“The allowances paid to State officers, including Members of Parliament and Members of County Assembly, similarly, should be reduced to lighten the burden on the public wage bill,” says the report.
“Further, the SRC should develop guidelines for Parliament to follow to ensure that no more than 60 per cent of the current gross pay for MPs shall be basic salary; and no more than 40 per cent of present gross pay for MPs shall constitute allowances.”
The report reiterated the fact that Kenyan MPs are substantially overpaid compared to those in other countries such as South Africa, taking into account relative GDP size, purchasing power and population size.
Parliament’s Sh23 billion budget in the 2014/15 fiscal year, for instance, translated to Sh55 million per member, revealing the high cost of running the legislature.
MPs’ salaries accounted for just 12 per cent of the budget, underlining the impact of the numerous allowances and special pay items that has seen Parliament take two per cent of the national budget against a global average of 0.57 per cent.