Economy

Civil servant pay to drop by Sh77bn amid IMF reforms

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National Treasury building. FILE PHOTO | NMG

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Summary

  • The wage bill of the national government will contract by Sh77 billion in the year to June, the first drop in a decade as the country moves to tame the ballooning public sector wage bill.
  • Data from the Commission on Revenue Allocation (CRA) shows that spending on salaries and benefits of national government employees will drop to Sh526 billion from Sh603 billion spent in the year ended June. This translates to a 12 percent drop.
  • The CRA attributes the data to the Treasury.

The wage bill of the national government will contract by Sh77 billion in the year to June, the first drop in a decade as the country moves to tame the ballooning public sector wage bill.

Data from the Commission on Revenue Allocation (CRA) shows that spending on salaries and benefits of national government employees will drop to Sh526 billion from Sh603 billion spent in the year ended June. This translates to a 12 percent drop.

The CRA attributes the data to the Treasury.

Kenya has for years struggled to contain its ballooning public sector wage bill that has squeezed funds for development, forcing the State to go loans for financing development projects and paying salaries.

The Treasury had not responded to our inquiries on the reasons behind the projected drop by press time. But this comes at a time the government plans to streamline allowances in the public sector under a deal signed between the Treasury and the International Monetary Fund.

The Treasury projects that spending on salaries and allowances will rise to Sh550.7 billion in the year to June 2023.

The anticipated drop comes amid plans to cap allowances including abolishing job-related benefits that account for the biggest chunk of gross monthly pay and merging others.

The Salaries and Remuneration Commission (SRC) last month capped allowances at 40 percent of their gross monthly pay starting, as the State moves to lower the public sector wage bill and free up more funds for development projects.

Streamlining of the allowances will ensure that basic salary accounts for not less than 60 percent of the gross monthly pay — a shift from the current unregulated model where allowances account for up to 259 percent of the monthly take-home for the public servants.

The SRC has accused government officers of multiplying the number of allowances from just 11 in 1999 to the current 247.

Allowances targeted for abolishment are those that the commission says are catered for through the workers’ basic pay.