Economy

Civil servants spared cut on allowances

LYN

SRC chairperson Lyn Mengich gestures during a press briefing on May 15, 2019. PHOTO | FRANCIS NDERITU | NMG

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Summary

  • Current civil servants will be spared hefty allowance cuts in new staffing and remuneration guidelines aimed at taming Kenya’s ballooning public wage bill.
  • The capping of allowances at not more than 40 percent of the monthly gross pay will only apply to new employees joining the civil service, cushioning the 865,200 workers attached to government and State corporations.
  • The exemption is contained in a draft allowances policy unveiled yesterday by the Salaries and Remuneration Commission (SRC).

Current civil servants will be spared hefty allowance cuts in new staffing and remuneration guidelines aimed at taming Kenya’s ballooning public wage bill.

The capping of allowances at not more than 40 percent of the monthly gross pay will only apply to new employees joining the civil service, cushioning the 865,200 workers attached to government and State corporations.

The exemption is contained in a draft allowances policy unveiled Tuesday by the Salaries and Remuneration Commission (SRC).

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.

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.

“Allowances and benefits that are abolished will cease to apply to any new employee in the organisation or new to the grade,” the SRC said through the draft policy unveiled for public participation.

“The employees currently being paid the allowances will continue to enjoy the allowance. This condition shall not apply to facilitative allowances.”

Facilitative allowances are paid to meet expenses incurred by officials in the course of duty such as daily subsistence allowance or per diem, which are hidden and bump up civil servants’ pay.

This signals the SRC’s bid to cut or eliminate payment of per diem, which the salaries agency reckons has been abused to inflate pay.

“The allowances have taken a remunerative dimension whilst they were intended to be facilitative in nature,” says the SRC.

“This has resulted in motivation for arbitrage opportunities by public officers by increasing the frequency for payment and application, against the principles of prudent management of public resources in line with Article 201 of the Constitution and [Public Finance Management] PFM Act, 2012.”

The public sector wages comprise basic salaries, remunerative allowances such as house and commuter; hardship, extraneous, domestic, and risk that are fixed in the pay slip.

These allowances will be untouched for the current public servants, with cuts imposed on new employees.

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

These perks include a medical allowance, entertainment allowance, and utility allowance to cater for water, electricity, airtime and security bills.

The SRC says it’s difficult to establish if the entertainment allowance is used for hospitality for official guests.

“Allowances and benefits whose rationale for payment is redundant and/or overlaps with that of the basic salary will be abolished,” says the agency.

The exclusion of current civil servants from the cuts means that taxpayers will continue to shoulder the hefty perks paid to the thousands of government employees.

If adopted for all government employees, the remuneration guidelines will see the reduction of the wage bill by approximately Sh100 billion annually.

The government wage bill is now consuming more than half of taxes and impeding spending on development projects.

The wage bill for the 865,200 public servants stands at more than Sh800 billion, having risen from Sh458 billion in 2013. The 247 allowances account for 48 percent of the total wage bill.

“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,” says the SRC.

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.

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 to about 25 percent of civil servants’ gross pay while the SRC favours 40 percent.