State jobs freeze not the answer

The announcement made this week by Public Service Commission chairman Stephen Kigoro that the government will no longer employ civil servants on permanent and pensionable basis from July 1, is perhaps the most profound decision made by the government since the abolition of automatic employment of university graduates in 1990.

Mr Kirogo said that it was all part of reforms aimed at trimming the huge public wage bill.

The flip side is that the decision will also create a labour market with fewer, secure, permanent and pensionable jobs.

Indeed, our economy is increasingly losing its capacity to create decent permanent jobs.

When the decision takes off, we will have compounded problems because the Civil Service continues to play both the role of employer-of- last resort and the biggest source of decent pensionable jobs in the labour market.

When you have a situation where the employer-of –last- resort- is the one leading the pack in in the race to kill long-term, secure, and pensionable jobs - the private sector will get the signal to follow suit. Workers are going to be forced to put up with whatever working conditions their employers impose for fear of losing their jobs.

Clearly, it is a decision that is likely to carry ramifications that will reverberate in the labour market for years. We have been touting impressive growth rates. But does it make sense for us to be bragging about a six percent annual growth rate when our economy is not able to produce decent permanent and pensionable jobs. We forget that the basic gauge of a society’s worth is its ability to provide its citizens with the opportunity to do decent work and earn a good income.

How will the plan to freeze permanent employment in the Civil Service impact the plan by the government to establish a funded pension scheme for civil servants? One of the most significant policy announcements made by Treasury Secretary Henry Rotich during the recent budget speech was the plan to roll out a civil service superannuation fund within the new financial year.

It was greeted with cheers because the government has been talking about implementing the transition from a non- contributory to a funded pension scheme for civil servants since 1997.

Yet if the freeze on permanent and pensionable employment is effected, the long-term viability of the superannuation scheme will be put to question.

It will be regrettable because pension funds are the biggest source of long-term funds in any developed economy.

Today, the civil service pension fund in South Africa is one of the largest investors in the country’s capital markets. Here, the fund holds significant interest in State controlled power producer- KenGen. Indeed, pension funds are the largest source of source of money for infrastructure projects.

I wonder whether the Public Service Commission calculated the likely impact of the planned freeze on permanent and pensionable employment in the Civil Service on the viability of this massive source of long-term investment plans we are planning to create in this country.

I believe that the plan to freeze permanent employment in the Civil Service will add to the prevailing sense of job insecurity in the labour markets in this country. ‘Rightsizing’, ‘downsizing’ and ‘retrenchment’ have become the order of the day in the private sector and the threat of redundancy hangs over everyone’s head.

And job losses are even more common in sectors of the economy that were once touted as the dynamic sources of future jobs such as financial service and ICT sectors.

The sense of insecurity that has swept through labour markets has been accentuated by the fact that even Nairobi Securities Exchange’s blue chip companies are implementing jobs cuts.

Make no mistake. With the public wage bill having hit Sh790 billion in the financial year 2018/19, the case for trimming it cannot be gainsaid. But killing permanent and pensionable jobs is not the answer.

A major cause of the huge wage bill is the existence both at national and county levels of highly paid individuals who were lucky to join the service on terms that were specifically negotiated for them without any regard being paid to parity or harmony with the Civil Service.