Rotich memo reveals Treasury fears over rising public wage bill (Kenya)

By Doreen Wainaina | Business Daily, Kenya January 7, 2017

Treasury secretary Henry Rotich has stopped fresh recruitment in the public service and announced new measures to curtail spending in a special memo that signals rising fears over the ballooning wage bill.

Mr Rotich says in the memo to Cabinet secretaries and accounting officers that new recruitment — except for essential services such as security, health and education — remain frozen.

The December 21, 2016 memo also stops the upgrading of schemes of service in the public service.

“The idea is to ensure that we have an appropriate labour force. To get an appropriate number, recruitment must be done in a manner that will not to create a bloated workforce,” Mr Rotich said in a telephone interview with the Business Daily.

The minister said that recruitment, upgrading of staff and replacement of critical technical staff will be considered on a case by case basis after obtaining the necessary approvals from the Public Service Commission.

Public Finance Management Regulations, 2015, demand that the national government expenditure on compensation to employees does not exceed 35 per cent of its equitable share of revenue.

President Uhuru Kenyatta’s government has since coming to power in 2013 struggled to contain the wage bill that takes 11 per cent of the gross domestic product (GDP) or 52 per cent of domestic revenues.

Total public wage bill stood at Sh568 billion in the last financial year well above the 35 per cent threshold.

In documents submitted to Parliament last month, the Treasury allocated additional Sh26.5 billion for civil servants’ salaries and house allowances, making them the biggest winners of the 2017/18 budget.

Adjusted salaries

The Treasury set aside Sh20 billion for the purpose of paying the adjusted basic salaries and Sh6.5 billion for the implementation of the third phase of the civil service house allowance scheme.

The new remuneration structure will see junior civil servants earn more as the Salaries and Remuneration Commission’s (SRC) moves to bridge the huge wage disparities in the public sector.

“It is better to have a lean workforce and pay them well than have many people who are underpaid,” said Mr Rotich.

Kenya’s labour market has been in turmoil as trade unions push for better pay for members and implementation of collective bargaining agreements signed with the government in the recent past.

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