Economy

Civil servants Sh100bn pay cut set for October

Lyn Mengich

Salaries and Remuneration Commission (SRC) chairperson Lyn Mengich at a press briefing in Nairobi on October 7, 2021. PHOTO | FRANCIS NDERITU | NMG

Civil servants will lose Sh2 billion weekly from October after the Salaries and Remuneration Commission (SRC) set the date for trimming public workers’ juicy allowances.

SRC chairperson Lyn Mengich said the review of a policy that will guide allowances in the public service is 80 percent complete and will be implemented in the next three months, paving the way for elimination and merger of some perks in October.

There are currently over 247 remunerative and facilitative allowances, up from 31 in 1999, payable within the public sector and they have the effect of doubling a worker’s monthly pay and account for 48 percent of the State wage bill.

The State aims to cap allowances at a maximum of 40 percent of a public worker’s gross pay, shifting from the present unregulated model that inflates the workers’ take-home.

If adopted for all government employees, the remuneration guidelines are expected to cut the wage bill by approximately Sh100 billion annually or Sh2 billion weekly.

ALSO READ: Civil servants’ allowances capped at 40pc of monthly salary

The allowance cut and the freeze of pay increases until 2025 will dampen the civil servants’ prospects of better fortunes amid tough economic times due to the Covid-19 pandemic.

“In terms of the analysis, we are at 80 percent now, then we will issue an advisory to the institutions on the new structure. We will do this in the next three months,” Ms Mengich said on Tuesday.

“A number of institutions like university councils have been approving other allowances yet they do not have the mandate to do this. We are analysing then we will say this is what it (allowances plan) should look like”

The allowances that look set to be chopped include entertainment, responsibility, medical and utility, which cover items such as water, electricity and phone calls.

The daily subsistence allowance or per diem, which the SRC says is widely abused to inflate pay, will also be reviewed.

The Treasury has been struggling to raise revenues to run the bloated public wage bill that consumes more than half of taxes, impeding spending on development projects.

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The cut in perks is one of the strategies, alongside a freeze in new hiring and removal of ghost workers, aimed at reducing Kenya’s ballooning public sector wage bill.

The SRC reckons many of the allowances being paid are already catered for through the workers’ basic pay, ultimately inflating salaries.

The wage bill for the 923,000 public servants stands at more than Sh890 billion, having risen from Sh458 billion in 2013.

“Absence of a policy to guide management and administration of allowances and benefits in the public sector has led to proliferation of allowances, distortions in remuneration, unfairness in pay, lack of transparency, accountability and inequity,” the SRC said in an earlier brief.

The agency says no public entity will be allowed to pay higher allowances just because it has strong financial muscles and the ability to pay.

More emphasis was put on allowances starting 2015 as the government saw it as an alternative to controlling its pension bill by not raising salaries.

ALSO READ: Perks push up pay for State staff despite freeze in salary raise

State think-tank Kenya Institute for Public Policy Research and Analysis (Kippra) said that allowances paid to civil servants have made the government the preferred employer and called for a radical review.

Currently, allowances have the effect of doubling an employee’s pay and in some instances growing it by a factor of 10.

Kippra recommends capping of allowances at about 25 percent of civil servants’ gross pay while the SRC favours 40 percent.

The Treasury had earlier committed to the International Monetary Fund (IMF) that the perks would be reviewed as part of conditions tied to the multi-billion shilling loan agreements that Kenya has inked with the multilateral lender.

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