Treasury is considering budget cuts to accommodate an additional Sh17 billion after the Supreme Court declined to stop the implementation of a new higher pay package for teachers.
Treasury Principal Secretary Kamau Thugge reckoned that borrowing and raising taxes to cover the additional teachers pay will hurt the economy.
Dr Thugge said the Supreme Court ruling will trigger a push for higher wages from other public servants, further worsening the public sector wage bill crisis.
The Treasury is considering budget cuts to accommodate an additional Sh17 billion after the Supreme Court declined to stop the implementation of a new higher pay package for teachers.
Treasury Principal Secretary Kamau Thugge told Parliament that budget cuts look feasible because the government is hesitant to borrow or raise taxes to plug the budget deficit brought home by the ruling.
The five-judge bench consisting of Chief Justice Willy Mutunga, his deputy Kalpana Rawal, Smokin Wanjala, Mohammed Ibrahim and Jackton Ojwang’ upheld a Court of Appeal ruling demanding that the teachers’ employer pay teachers a 50-60 per cent pay rise until its appeal challenging the increment is heard and determined.
The teachers’ employer has already paid the 280,000 public tutors their August salaries and has up to end of the month to top-up the balance of Sh1.4 billion.
“We will be thinking of a supplementary budget which means cutting expenditure from other budget items to raise funds,” Dr Thugge said after meeting the National Assembly Finance, Planning and Trade committee to discuss amendments to the Finance Bill, 2015.
“If we were to provide those funding, there are only few ways which we now need to discuss. The deficit that we have in the 2015/16 financial year is well above Sh500 billion. Coupled with what the Supreme Court allowed, we expect the deficit to be much higher.”
The Teachers Service Commission (TSC) had earlier estimated that implementing the increment over a four-year period would cost the Treasury an extra Sh73 billion.
Dr Thugge reckoned that borrowing and raising taxes to cover the additional teachers pay will hurt the economy.
“We don’t want to borrow to finance recurrent spending,” he said, adding that a tax increase will be a disincentive to investors. This signals the deepening of austerity measures introduced early last year, including a wages freeze, leasing of vehicles as opposed to buying, cut in travel budgets and government advertisements.
The 280,000 tutors currently take up 38 per cent of Kenya’s Sh418 billion public wage bill. A teacher in P1 job group G, which is the lowest paid category, will now take home Sh26,707 up from Sh16,692. The best paid teacher, a chief principal in job group R, will now earn Sh163,634, up from Sh109,089.
Dr Thugge said the Supreme Court ruling will trigger a push for higher wages from other public servants, further worsening the public sector wage bill crisis.
“As you know, teachers’ salaries had been harmonised with the rest in the civil service. If you enhance the salary of one group in a harmonised salary scale, the rest may agitate for elevation of their salaries,” he added.
The TSC had argued that a pay increase of between 50 and 60 per cent could not be implemented because it was unconstitutional and the increment would not be retrievable if it won the Court of Appeal case.
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