State abandons projects in bid to pay new salaries
Minister for finance Njeru Githae (right) flanked by KUPPET secretary general Akelo Misuri (2nd right) and Omboko Milemba sign an agreement on realignment of teachers salaries on September 24, 2012 at Treasury buildings. Photo/JENNIFER MUIRURI
What you need to know:
The government awarded teachers Sh13.5 billion, which will be paid in October with arrears from July this year to harmonise their salaries with those of civil servants. Last week, it awarded Sh7.8 billion in line with an agreement reached two years ago.
The awards saw lecturers resume teaching on Monday while more than 250,000 teachers will be back in class today after their unions, Knut and Kuppet, called off their strikes that had lasted for three weeks.
The government’s total wage bill in the public sector last year rose from Sh261 billion in 2010 to Sh291 billion in 2011 and is expected to increase by another Sh20 billion this year.
Kenya’s economy is expected to grow by between 3.5 and 4.5 per cent from 4.4 per cent in 2011, giving little room for growth in tax revenues.
Development projects that have not started will be sacrificed as the Treasury moves to seal a Sh21 billion budget hole caused by pay awards to striking teachers and university lecturers.
Finance minister Njeru Githae said on Monday that he had constituted a team to identify the projects and recall the votes for payment of salaries.
“We are looking for at least Sh20 billion and projects that have not started will be suspended,” said the minister, saying raising taxes would be a last resort.
Mr Githae also said he had deployed four teams to investigate possibilities of raising revenues from borrowing, tax increases, development projects and revenues losses in customs. The teams are expected to submit their findings by Friday.
The government awarded teachers Sh13.5 billion, which will be paid in October with arrears from July this year to harmonise their salaries with those of civil servants. Last week, it awarded Sh7.8 billion in line with an agreement reached two years ago.
The awards saw lecturers resume teaching on Monday while more than 250,000 teachers will be back in class today after their unions, Knut and Kuppet, called off their strikes that had lasted for three weeks.
The government’s total wage bill in the public sector last year rose from Sh261 billion in 2010 to Sh291 billion in 2011 and is expected to increase by another Sh20 billion this year.
“We expect the purchasing power to be enhanced, leading to inflationary tendencies. It would also negatively affect development capital and growth,” said Samuel Nyandemo, a senior economics lecturer at the University of Nairobi.
Kenya’s economy is expected to grow by between 3.5 and 4.5 per cent from 4.4 per cent in 2011, giving little room for growth in tax revenues.
Mr Githae said that salary discrepancies between magistrates and judges, permanent secretaries and their deputies, teachers and civil servants had led to several reviews and left the Treasury with a heavy recurrent budget.
“Everyone is asking why they are earning less than the other,” said Mr Githae.
The Treasury also denied accusations by Education minister Mutula Kilonzo that they had delayed paying out the Sh13.5 billion for teachers after the request was made to the Cabinet four days before the strike.
Mr Githae said that Treasury only gives out money after concrete decisions have been made.
The Sh13.5 billion deal will see secondary school teachers and post-secondary school teachers receive the largest salary increase.
The Treasury had earlier offered a Sh13.5 billion salary increment payable in three phases in which Sh6 billion was to be paid by end of next month backdated to July 2012, Sh5 billion in January 2013 and Sh2.5 billion in July 2013. However, teachers rejected this and demanded a lumpsum payment.
