Allowances to go in plan to cut wage bill : The Standard

The government is set to slash allowances for civil servants as it looks to tame the wage bill. Perks to government employees have grown over time and account for about 40 per cent of the public wage bill. They are now seen as among the low lying fruits in the State’s bid to cut costs. Salaries and Remuneration Commission (SRC) Vice Chairman Dalmas Otieno said rationalising the allowances would include doing away with some while reducing others.  Kenya’s wage bill stood at Sh795 billion for the financial year to June 2019 and comprised of Sh322 billion paid as allowances.

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“If you look at the wage bill, 40 per cent goes to allowances, introduced as the government avoided to increase basic salary, which would increase pension liability,” said Mr Otieno. “The unions also found it easy to ask for allowances so that they kept on proliferating over time and today, we have 247 different allowances, some of which are the same by different names. This has to stop,” he said, during an ongoing conference convened by SRC to discuss how to tackle the country’s wage bill. While the bill has recently declined from 57 per cent of revenues in 2013 to 48 per cent this year, the State has a target of reducing it further to 35 per cent, as set out in the Public Finance Management Regulations (2015).

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Non-productive government employees, as well as ghost workers, have contributed to the high wage bill, according to Otieno. “Many public servants cannot give you their job description while there are too many ghost workers. This is due to pressure to employ more as well as weak payroll systems,” he said. In addition to review of allowances, the vice chairman said the government should also consider its pension policy, noting it should migrate from the current defined benefit system to defined contribution. In the latter, the civil servants and government would both contribute the funds that the employee will get in retirement. Currently, the government sets aside money for pensioners in every budget. “Effort by the government is required to achieve a public sector wage bill of not more than 35 per cent of revenue as per the Public Finance Management Regulations,” said SRC Chairperson Lyn Mengich. This will, however, be a tough undertaking for the government since achieving the wage bill target of 35 per cent of revenues would mean trimming public sector salaries by at least Sh182 billion. The conference comes at a time when the country is grappling with mounting liquidity pressure in both the national and county governments, which has been worsened by non-payment of debts. The Council of Governors noted that while the wage bill has risen to unsustainable levels, the demand for public service would see counties continue to hire.

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Related Topics

Salaries and Remuneration CommissionCivil servant allowancesPublic Finance Management Regulations