Kenya govt to shave down slice of public sector wage bill - CNBC Africa

Kenya govt to shave down slice of public sector wage bill

East Africa

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Kenya's Deputy President William Ruto with the country's President Uhuru Kenyatta. PHOTO: The Presidency, Kenya

Kenya's president has ordered a 20 per cent pay cut for all parastatal heads in a bid to manage the country's wage bill, which has more than doubled in the last five years.

“My government is convinced the recent growth in public sector wage bill is unsustainable and unacceptable,” President Kenyatta said during the launch of the national debate on the Public Wage Bill Sustainability.

“It is nice to receive ever larger slices of our national cake.  But collectively, as a country, we have other priorities: we must fund our pledges to the various capital investments laid out in the current 2030 Medium Term Plan and the Jubilee Manifesto.”

The move comes two days after the president and his deputy, William Ruto voluntarily cut their salaries by 20 per cent while cabinet members, slashed theirs by 10 per cent. There are over 100 parastatals in Kenya. 

According to National Treasury cabinet secretary Henry Rotich, Kenya’s wage bill has been rising significantly despite a poor labour productivity of the civil servant.  While the salaries have risen by 21 per cent in the last three years, productivity has increased by 30 per cent over 11 years.

As a result, its sustainability has become far above the average of other East African nations, and Asian countries such as South Korea, Singapore and Malaysia, crowding the country’s resources for the much needed development projects.

The additional employment of 58,700 public servants, including police, nurses and teachers between 2008 and 2012, has also added to the ratcheting of the public wage bill.

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“Though it is true that public sector average wages may compare favourably with the private sector, when we add the huge sums the government pays out in allowances and other benefits, public sector wages actually out-perform the private sector,” Kenyatta explained.

“We should, therefore, ask whether the government would do better to adopt a consolidated pay package policy that covers all allowances, or whether it can retain the present system with stricter safeguards to stop abuses.”

Kenyatta added that both he and Deputy President William Ruto had recently decided upon taking a 20 per cent wage cut, with other members of cabinet also opting to take a 10 per cent wage cut.  

Kenyatta however warned that failure for other civil servants and cabinet members to take a pay cut could result in them losing their jobs in favour of others who would accept to work for the lowered rate.

While there have been suggestions to raise taxes as a means of tackling the burgeoning wage bill, Kenyatta explained that such a move would be at the expense of the country’s doing ease of business with the rest of the world and youth employment.

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“Let us think out of the box, let us not presume that the only way to make ends meet is every single year talking about increasing our salaries,” said Kenyatta.

“Let us talk about reducing the cost of doing business, let us talk about investing in a more appropriate way that make a lot more meaning to our people today and to future generations.”

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