The average take-home for a government employee in Kenya crossed the Sh70,000 mark last year, overtaking the entry level salary in the banking industry and compounding the public wage bill crisis at a time the majority of workers are dealing with payslip erosion from salary stagnation and rising inflation.
An analysis of the latest data from the Salaries and Remuneration Commission (SRC) shows the public wage bill hit Sh1 trillion for the first time in the 2021/22 financial year, rising from Sh784.5 billion in 2017/18. The number of public sector employees rose by 95,000 in the five-year period to hit 937,900.
Over the same period, the average monthly gross earnings per employee has grown by 12.6 percent to Sh70,229 from Sh62,341.
This comes at a time the SRC is considering freezing new hires as part of initiatives to drive the public wage bill as a share of revenues to no more than 35 percent by June 2028.
The SRC says the government must endeavour to do more with less resources even as the staffing levels remain low after the wage bill crossed the Sh1 trillion mark.
“We want to have a conversation analysing why we would need to grow the staff establishment by a further 60 per cent if we are already able to operate with staffing levels of 40 per cent. Raising the staff establishment from the current levels would result in the doubling of the wage bill,” stated SRC chairperson Lyn Mengich.
At Sh70,000, an average government employee is now taking home 1.4 times more than that of an entry-level bank employee.
The Banking Insurance and Finance Union (BIFU) last year negotiated downwards to lower the entry-level salary in the industry from Sh82,000 to Sh50,000.
The fact that government employees also enjoy many allowances, access to cheaper loans and security of tenure is now making working for the State lucrative for new workers.
To contain the wage bill, Kenya must cap its annual growth at no more than 10.4 per cent from the fiscal year starting July 1.
It is estimated the wage bill will hit Sh1.17 trillion in the current 2023/24 fiscal year to June based on a total revenue estimate of Sh4.97 trillion at the end of the four-year cycle.
Any hiring freeze plans would, however, require balancing, there being a need for continued recruitment to critical public sectors such as healthcare, education and security.
The SRC is expected to drive home the principle of doing more with less at the third national wage bill conference slated for between April 15 and 17.
At the same time, the agency is banking on staff productivity to grow revenues which could bring down the share of wages as a percentage of the national cake.
So far, the SRC says the framework for recognising productivity has been implemented across the public sector under which workers will earn bonuses as the incentive to hit and surpass revenue targets.
Kenya’s labour productivity outcomes have remained wanting with the country ranking 26th and 153rd in Africa and on the globe respectively according to data from the International Labour Organization (ILO).
Productivity gains for staff are anchored in revenue growth, generating value for money and the creation of quality outputs.
The SRC has invited stakeholders to explore the role of productivity in lowering the wage bill using technology, innovation in payroll management and service delivery and an analysis on the difference between approved staff establishment against optimal levels for efficiency in the public service and wage bill sustainability.
The SRC highlights low labour productivity, disproportionate increase in the number of public service employees and sub-optimal organisation structures as the leading drivers of the public wage bill growth.
In the recent past, the SRC has undertaken initiatives to reduce the wage bill including freezing the salary structures of more than 90 State corporations, constitutional commissions and independent offices in the second and third remuneration review cycles.
The SRC has also in the past three years limited approvals for salary increase requests to just Sh12 billion against Sh98 billion.
Meanwhile, the abolishment of ministerial allowance and plenary sitting allowance is expected to save Sh6.8 billion in the next four years while the eliminated taxable car allowance will shave some Sh9.7 billion over the same period.
The reduction in allowances of vice chancellors and their deputies is estimated to yield Sh808 million in savings.
Ms Mengich says attaining the desired 35 percent wage bill will equally require the contribution of employees in the public service.
“The implementers will be the entire public service which forms part of the wage bill solutions. In the last conference, we had about 14 resolutions and 70 percent of them have since been implemented while others are in the pipeline,” she added.
