Economy

President Ruto, Rigathi Gachagua, MPs set for 14pc pay raise in SRC review

DNCommissionersMeeting21

Deputy President Rigathi Gachagua addressing media at the Deputy president official residence on June 21, 2023 after holding a meeting with Constitutional Commissions and Independent Offices. With him is the Salaries and Remuneration Commission (SRC) Chair Lyn Cherop Mengich. PHOTO | FRANCIS NDERITU | NMG

State officers, including the President, the Deputy President, Cabinet Secretaries and MPs, are set for a 14 percent pay raise on average over the next two years starting next month in a review proposed by the Salaries and Remuneration Commission (SRC) to cushion them against the rising cost of living.

If approved, the officials will enjoy significant relief from the impact of the persistently high inflation which has eroded personal incomes amid rising cost of basic consumer products.

In contrast, salaried workers, part-time workers and workers in the informal sector will continue to find themselves worse off in a biting inflationary environment.

Read: SRC approves Sh2bn pay rises from 50 requests

President William Ruto’s monthly gross remuneration package will rise by 7.1 percent from July 2023 to Sh1,546,875 from Sh1,443,750 currently before a further 6.7 percent jump to Sh1,650,000 from July 2024.

On his part, Deputy President Rigathi Gachagua’s monthly compensation will rise to Sh1,367,438 from Sh1,227,188 at present from July 1 before hitting Sh1,402,500, representing a cumulative 14.3 percent jump in his remuneration package over the two years.

The remuneration of Cabinet Secretaries goes up by a similar margin, rising to Sh1,056,000 per month from July 1, 2024 from Sh924,000 at present.

Members of Parliament, including senators, will meanwhile earn Sh741,003 and Sh769,201 in the two upcoming financial years respectively from Sh710,000 currently, representing a cumulative 8.3 percent wage increase in the period.

The revised remuneration package to MPs and senators nevertheless excludes committee sitting allowances which are capped at Sh120,000 per month.

In the counties, governors will receive a comparable rise in compensation to the President, meaning they will earn Sh1,056,000 by July 2024 from the current monthly gross pay of Sh924,000.

Members of the County Assembly will meanwhile earn Sh164,588 in a little over a year’s time from Sh144,375 at present as the SRC recommends a 14 percent increase in their monthly remuneration.

Other State officers set to enjoy a pay raise are principal secretaries, the Chief Justice, the Deputy Chief Justice, the Auditor-General, judges, the Director of Public Prosecutions, the Inspector-General of Police and the chairpersons of key commissions such as the Independent Electoral and Boundaries Commission.

The draft changes to the compensation of state officers, which were announced on Thursday by the SRC, also cover allowances and benefits for the State officers such as car loans and mortgage benefits, pension and medical and hospital insurance.

The SRC has invited public comments on the proposed remuneration packages before issuing a gazette notice which would bring to effect the new salaries to State officers.

The proposed review covers the third cycle of review since the 2013/14 financial year and aligns with the SRC’s mandate of advising the national and county governments on the remuneration benefits of public officers.

If approved, it will further expand the country’s wage bill, which stood at Sh506.29 billion and Sh190.11 billion respectively for the national government and counties for the fiscal year ended June 2022.

In its report covering the period, the SRC noted the continued increase in the wage bill was eating up resources for other government expenditures even as it tipped revenue growth to improve the sustainability of the wage bill.

“The wage bill for the national and county governments continued to increase, thus crowding out resources for development and service delivery. Growth in revenue collection would positively impact the wage bill to total revenue ratio if sustained,” the SRC noted.

The wage bill to total revenue ratio ranged between 40 percent and 44 percent between the fiscal years 2016/17 and 2020/21 and had been expected to rise to 46.26 percent in the year ended June 2022.

“This implies that the ratio is projected to remain above 40 percent, significantly above 35 percent, which is the recommended ratio as per the Public Finance Management Act of 2012 and the 2015 PFM regulations,” the SRC added.

During the review period to June 2022, the wage bill was impacted by the Teachers Service Commission’s recruitment of 5,000 teachers, and the increase of the minimum wage by 12 percent on May 1, 2022.

Read: SRC seeks to raise per diems by up to 67pc in fresh review

The SRC has been battling to contain the ballooning wage bill, including the abolishment of plenary sitting allowances for MPs and snubbing pay rise requests from public institutions.

For instance, between January and March this year, the SRC said it saved taxpayers some Sh2.8 billion by rejecting requests for salary reviews, allowances and benefits review.

State officers will be the envy of private sector workers whose 5.6 percent wage increase in 2022 was wiped out by inflation.

Wages factoring in inflation fell by 2.7 percent last year (real wage growth) as the cost of living soared largely from the fallout of the Russia-Ukraine war and drought.

Inflation has remained stubbornly high this year largely from higher food and fuel costs, forcing the Central Bank of Kenya’s hand in setting the benchmark lending rate to the highest level in nearly seven years as a counter measure earlier this week.

May inflation eased up to 8.0 percent in May from 7.9 percent in April to remain above the prescribed upper limit of 7.5 percent.

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