Kenya’s public wage bill, which has grown by at least 5.69 per cent annually for the past seven years, is set to hit a new high when civil servants get a parity pay rise this month.
The public wage bill crossed the trillion mark for the first time last year to reach Sh1.055 trillion for the 2021/22 financial year, up 5.69 per cent from a wage bill of Sh998.643 billion the previous year.
This wage bill accounted for about 51.77 per cent of the Sh2.04 trillion ordinary revenue collected by the Kenya Revenue Authority (KRA) during the period, underlining the impact of the ballooning wage bill on government coffers.
However, the Salaries and Remuneration Commission (SRC), which is yet to release wage bill estimates for the just-ended 2022/23 fiscal year, has lined up an eight per cent pay increase for civil servants, the first in six years.
Assuming the public sector grows at the minimum rate of 5.69 per cent, the wage bill will exceed Sh1.12 trillion in FY 2022/23 and grow to at least Sh1.2 trillion in the new financial year.
Dr Ruto on Friday directed the SRC, which is independent of the Executive, to stop the pay increase for Members of Parliament (MPs), Principal Secretaries (PSs), Cabinet Secretaries (CSs), the Deputy President, himself and other top government officials.
However, the SRC is going ahead with the salary reviews that will result in a record increase for civil servants to cushion them from the erosion of their earnings due to the higher cost of living.
The National Treasury has set aside Sh22.6 billion for the salary increase in the 2023/24 financial year and another Sh22.6 billion in the 2024/25 financial year.
The SRC said the pay review will align remuneration with the relative value of jobs, thereby achieving the principle of equal pay for work of equal value and progressive harmonisation of pay structures.
The SRC said there is a huge disparity in salaries in the civil service and that about Sh340 billion is needed to increase the salaries of those in the lowest categories.
“To achieve the target market positioning at the 50th percentile and progressive harmonisation would cost Sh340 billion,” the commission said.
“However, given the current economic realities and with due regard to fiscal sustainability, and in consultation with National Treasury, the budget allocated for the wage review is Sh22.6 billion per annum. This represents two per cent of the total wage bill”.
The last review of civil servants' salaries was in the 2017/18 financial year, which resulted in the public wage bill increasing by 16.96 per cent from Sh670.762 billion to Sh784.526 billion.
Wages were supposed to be reviewed in the 2021/22 financial year, but this was postponed due to the Covid-19 pandemic, which ravaged the economy and led to a 0.3 per cent recession, limiting the government's ability to fund a wage increase.
The record wage bill comes at a time when the government has stepped up hiring, creating jobs for thousands of workers.
Data from the SRC shows the number of civil servants reached 963,200 last year, up from 923,100 the previous year and 774,700 in the 2015/16 financial year.
Adding to the headache of the public wage bill is a sharp rise in pension expenditure, driven by an increasing number of people retiring from the public service.
