Kenya pays high price as perks for MPs up Sh3.1bn

Salaries and perks for MPs increased by 28 percent or Sh3.1 billion in the year to June after the lawmakers pushed for the suspension of pay cuts by the Salaries and Remuneration Commission (SRC), adding to the heavy burden that public and State officers have placed on tax revenues.

Because of this, and other pay reviews affected different cadres of public and State officers, including county government employees, Kenya’s payroll bill is 17 per cent above the global average of 35 per cent for middle-income countries, a club that Kenya recently joined after recalculating its economic size.

Kenya’s public wage bill, including that of national and county governments, stands at about Sh700 billion a year, gobbling up half of the tax receipts.

Public sector employees, including county staff, are about 850,000 who account for only two per cent of the population.

This reality has in the past unnerved policymakers since not much is left for development projects, slowing the country’s economic growth wheels.

Data from the Controller of Budget (CoB) shows that MPs' earnings increased to Sh14.35 billion in the period to June, up from Sh11.21 billion a year earlier.

The rise came in a year when the MPs successfully petitioned the court to freeze SRC salary cuts that targeted top officials, allowing the law makers to earn top salaries as well as juicy sitting and travel perks.

Job losses

This is the fastest growth in MPs' wage bill since 2013 when the Jubilee government took office in an economy that has witnessed a string of job losses, near-stagnant salaries and a freeze in hiring following sluggish corporate earnings.

The SRC, which advises the government on the wages of public officials, had in July 2017 cut an MP's salary to Sh621,250, down from Sh710,000 previously. The commission abolished reimbursable mileage allowance, stopped sitting allowances for parliamentary plenary sessions and capped payment for committee meetings to 16 sittings per month.

The lawmakers pay cuts along with salaries of other top officials, including the president and cabinet secretaries, was meant to save the Treasury Sh8.5 billion annually in an economy where public sector wages consumed half of taxes.

But the High Court in December last year agreed with the MPs that the cuts could potentially be viewed as discriminatory and malicious, suspended the notice that introduced the salary reductions pending the conclusion of the suit.

This allowed Parliament to revert to paying MPs the higher salaries and perks as well as offering them the scrapped Sh5 million car grant, cementing their position among the world’s best-paid lawmakers.

Lawmakers' pay increased 20 percent to Sh11.19 billion in the year to June, amplified by the uncapped payment for meeting allowances.

Travel perks jumped by 62 percent to Sh3.16 billion after the courts suspended the restrictions imposed by SRC, which were based on the distance MPs have to travel to their constituencies from Parliament.

The commission had also fixed maintenance car allowance of Sh266,665 per month for those within a distance of 325 kilometres from Nairobi and Sh444,430 for MPs whose constituencies are about 625 kilometres from Parliament.

Now, MPs enjoy reimbursable mileage allowance that is not capped.

Combined, the perks and the salary can push an MP's monthly pay to Sh1.5 million.

This is more than the monthly pay for President Uhuru Kenyatta and his deputy, William Ruto.

SRC cut the president’s salary to Sh1.44 million a month from Sh1.65 million, while his deputy's was reduced to Sh1.23 million from Sh1.4 million.

In the initial years of his first term, President Kenyatta talked tough against the ballooning wage bill, but softened his stance to award the entire civil service the first pay raise by his administration as Kenya approached the 2017 General Election.

However, the average pay increase for Kenyan workers last year stood at 7.9 percent, paling in comparison to the 28 percent enjoyed by the lawmakers.

Private sector

The trend was not replicated in the private sector, where companies struggled based on the profit warnings issued by firms listed at the Nairobi Securities Exchange (NSE) — the economic indicator of the financial health of companies and economic performance.

More than 15 of the 62 companies listed on the NSE reported net income drops by at least 25 per cent last year compared with 2017.

Several listed firms have either shed jobs or announced layoffs in recent months.

The Treasury has signalled a continuation of job cuts, hiring freezes and pay increase restrictions over the next year after it lowered income tax collection targets by Sh76.2 billion on the back of sluggish corporate earnings.