The Public Service Commission (PSC) has stopped employing entry-level State workers on permanent and pensionable terms in a radical policy shift aimed at taming the runaway government wage bill.
Fresh university graduates, diploma holders and other professionals getting jobs in ministries will now be deployed on renewable three-year contracts based on “satisfactory performance,” PSC chairman Stephen Kirogo said Tuesday.
Only senior civil servants the rank of a director (job group S) and above are currently hired on contractual terms.
The PSC chairman said the new policy is aimed at slowing down growth of the public wage bill while enhancing productivity.
The policy, effective from the year starting July, will however not affect teachers, the police and military who are not classified as civil servants.
It will also cut down on costs associated with retirement benefits such as pension and retrenchment as the fresh employees will only be given a service gratuity when they leave at the end of their contracts.
“It will help shrink that expanding public wage bill. It will also allow people to move away freely without being limited, while the Public Service Commission will also be able to bring in new skills at whatever level of employment,” said Mr Kirogo.
“This is a global practice and even successful governments have adopted that system as a way of employment. We hope we will get support so that we start managing this issue of the escalating wage bill.”
Kenya has been grappling with a spiralling public wage bill for years now, largely driven by hefty remunerative allowances such as house and commuter perks as well as retirement benefits like pension and gratuity.
Other perks accruing to public sector employees on top of basic salary include hardship, extraneous and risk allowances as well as insurance covers for medical and personal accident.
The Salaries and Remuneration Commission (SRC) estimates the current public wage bill will hit about Sh790 billion this year from Sh733 billion in the year ended June 2018, Sh664 billion the year before and Sh615 billion at the end of financial year ended June 2016.
The public wage bill has expanded from Sh465 billion in June 2013 despite a freeze on new employment except for essential sectors such as security, education and health following a moratorium by Treasury Secretary Henry Rotich.
Civil servants attached to ministries are, however, estimated at just 66,000 of the 842,900 total workforce in the public sector that includes the Teachers Service Commission, parastatals, the 47 counties, among other state agencies.
“What we need is a public service that is productive, able to drive national economic growth and when that happens, we create more employment out there,” said the PSC chair.
“If your passion is agriculture and you have a very good support system, then you don’t need to seek employment in the public service. We want to desist from making people feel that it’s only the public service that can provide wealth.”
The public wage bill accounted for about 55 percent of the Sh1.31 trillion ordinary revenue – comprised of taxes and non-tax streams such as levies, rent of buildings, fines and forfeitures – in the last financial year ended June 2018, which is more than 35 percent recommended by the SRC.
SRC commissioner John Monyoncho, however, said the ratio of public wage to gross domestic product (GDP) has shrunk to about 8.29 percent from 11.5 percent for the year ended June 2013.
“That means there’s been a slower growth in wage bill compared with GDP. But in terms of ordinary revenue, it has not grown as fast,” said Mr Monyoncho.
The SRC targets to reduce the ratio of public wage to GDP to seven percent in the medium term largely by phasing out some allowances in the public sector.
Mr Kirogo said the new employment policy will start to apply on successful applicants who will take up about 3,200 vacancies that PSC advertised back in March.
“First contract will be three years which will be renewable based on satisfactory performance and this is the standard that we want to adopt,” he said. “We have done a study which shows that you (entry-level employees) barely want to be in one job for two years and we have to move with the trend.”