Wage bill lie: The policies and doublespeak stoking crisis
SRC chairperson Lyn Mengich and Public Service CS Moses Kuria during announcement of a national wage bill conference at Nairobi Safari Club on April 12, 2024.
Photo credit: Photo | Francis Nderitu | Nation Media Group
A presidential task force in 2014 recommended at least 75 State corporations be abolished. Instead, 87 new parastatals have been created, exposing successive governments to doublespeak, which continues to worsen the runaway wage bill.
The arbitrary creation of State agencies contributes to a bloated workforce, payments to ghost workers and fat perks for civil servants, sum up the wastage of taxpayers’ money that deepens the crisis.
Ironically, the recommendation to abolish non-performing State corporations was made in 2013, on the eve of the country’s first national conference on the wage bill crisis in 2014, but like other radical proposals, has never been implemented for political expediency.
And a decade later, a huge government delegation led by President Ruto last week converged, yet again, to discuss the problem, the third such national conference, deliberating on the same issues that have never been addressed over the years.
Close to 3,000 government delegates gathered at the Bomas of Kenya for three days to explore how to lower the soaring public wage bill that currently consumes nearly half of the taxes and violates by far the legal limit of 35 percent share of the revenues.
The set up of new parastatals through Acts of parliament or the Companies Act has seen the proliferation of state agencies that don’t make business sense but only serve as employment bureaus for the politically correct.
The Presidential Taskforce on Parastatal Reforms in 2013 recommended a reduction of state corporations from 262 to 187 by merging some and scrapping others.
“Many Kenyans don’t know that the parastatals are one of the largest sectors in the civil service employing more than 200,000 people and having a wage bill of at least Sh150 billion," constitutional adviser to then-President Uhuru Kenyatta, Abdikadir Mohammed, who chaired the task force, said in 2014. But fast forward to 2024, 87 new State corporations have been created raising their number to 349, mainly due to Motions introduced by MPs to create subsidiaries for existing corporations without proper feasibility studies.
The establishment of state corporations through private member Bills in parliament and CS prerogatives limits the scope of the State Corporations Advisory Committee (SCAC) to exercise its advisory mandate.
Now, the watchdog says unless the law is amended to bar MPs and CSs from recklessly creating new corporations they have been doing, attempts to lower their wage bills will be in futility.
“Oftentimes, private member Motions are driven by personal interests or as fossils of other interested parties out there. Such Bills end up as Acts of Parliament and create state corporations without a proper feasibility study and consideration of their financial implications,” says SCAC chairperson, Philip Mong’ony.
Mr Mong’ony explains out of 65 corporations created under the Companies Act- literally through CSs directives- 27 were subsidiaries of existing corporations and most of them are struggling financially, and majority of the corporations (230) were set up under Acts of Parliament- ostensibly through private member motions.
“We are in this problem because of incessant private members’ motions. No private members’ Bills should be entertained. Any laws that grant a CS the power to create a State corporation should be amended. State corporations should not create subsidiaries without going through PFM regulations,” he says.
Although salary increments implemented despite shortfalls in revenues partly contribute to the crisis, even more, problematic is the wasteful habit of civil servants padding their pay with unnecessary allowances.
A government-commissioned study in 2014 found allowances in most job groups constituted almost 70 percent of gross pay and that in extreme cases the hefty perks had the “effect of doubling an employee’s pay and in some instances growing it by a factor of 10.”
At the time, the study found the lowest-paid government worker earned a basic salary of Sh7, 701 which rose to a gross pay of Sh34,188 after factoring in allowances totalling Sh26,486. It said about 84 percent of all public sector employees are in lower paying job scales A to J.
But the highest earning State official pocketed a basic pay of Sh737,332 that was padded by fat allowances totaling Sh889,912 raising the monthly gross pay to Sh1.6 million.
These top earners constitute about 16 percent of the workforce, according to the research commissioned by the Salaries and Remuneration Commission (SRC) and carried out by the Kenya Institute of Public Policy Research and Analysis (Kippra).
“The numerous allowances are used to conceal money paid out to civil servants and which forms a big part of their pay,” stated the report which formed the basis for a reduction of public service allowances being done now by SRC.
Among the perks scrapped starting last year are plenary sitting allowances for MPs and MCAs, several allowances for officials serving in taskforces, and ministerial and taxable car allowance. SRC chairperson Lyn Mengich says about Sh17 billion will be saved from the reforms on payment of allowances over four years.
The reforms on allowances were made even more urgent by another study in 2019 that showed there were about 247 different allowances paid in the public service.
An audit last year showed that some 21 junior staff in the State Department for Public Works earned the equivalent of Sh600,000 each in travel allowances monthly, in the year ending June 2022.
An SRC report shows that in the three years ending June 2023, public servants pocketed more than Sh1.2 trillion in allowances alone, with travel taking up Sh121 billion.
And SRC approved Sh24.8 billion in salary requests between July and December 2023, even as Kenya Revenue Authority (KRA) recorded shortfalls.
“Do we hold salary increments if the revenues do not get to where we projected? Once you have a salary, we cannot take it away. That is one of the problems because you project an increase in revenue and salary increases are based on those projections, so if you don’t hit that revenue figure, that salary will still be increased and that is partly why we have that problem,” Mengich said before this year’s conference.
A government policy to review the salaries of workers by three percent annually also means that automatically, the wage bill increases even when a worker is not productive.
Kenya’s public service also measures inputs and processes to score workers’ productivity, instead of outcomes, which has been the standard in the private sector locally and across the world.
In the year ending June 2024, the wage bill will consume 47 percent of the estimated Sh2.49 trillion taxes, a 4.6 percent improvement from the status in 2014 when the expenditure was 50.6 percent of ordinary revenues.
While SRC had initially projected the wage bill would be 39 percent of Sh2.9 trillion revenues during the 2023/24 fiscal year, Treasury has since revised revenue targets down to Sh2.49 trillion amid struggles by KRA to collect taxes, with Sh36 billion monthly shortfalls.
