We saved Sh11 billion in six years of fiscal reforms

The Salaries and Remuneration Commission (SRC) has saved the country Sh11 billion in the past six years.

The SRC said in a scorecard report released yesterday that it would also reduce the ratio of public wage bill to revenue from 51.54 per cent in the 2017-2018 financial year to 46.64 per cent in the 2022-23 financial year.

The SRC said a 2019 study on allowances payable in the public service contributed to the outcome.

“The study found that government servants received 247 different allowances, which accounted for 48 per cent of their total wages. As part of the second wage bill conference resolution, the SRC developed a policy framework for allowances for public servants,” said SRC chairperson Lyn Mengich at the launch of the six-year report.

She added: “In 2021, the SRC began a phased streamlining of the management and administration of quotas. An estimated Sh11.2 billion in savings will be achieved annually through the implementation of the public servant quota policy framework, including the single action of abolishing quotas.”

The report comes as the six-year terms of the SRC chairman and its six commissioners are set to end on September 11, 2024.

Mr Mungić said the reduction is expected to fall further to 39.22% in the 2023-2024 fiscal year in order to comply with the Public Finance Management Act, which requires the ratio of payroll to revenue not to exceed 35%.

Monjichi said that although the absolute amount of wage expenditure has increased, from 785 billion shillings in the 2017-2018 fiscal year to 1.035 trillion shillings in the 2021-2022 fiscal year, the downward trend has remained. It is expected that the wage expenditure will further increase to 1.7 trillion shillings in the 2023-2024 fiscal year.

Monjic said revenues also grew from Sh1.5 trillion to an estimated range of Sh1.1 trillion to Sh2.986 trillion by 2024. But she said the projected Sh1.7 trillion would fall if revenues did not reach that level. “The absolute increase in public wage spending is attributed to increased employment in the education, health and security sectors, which are essential services. It is also the result of upward adjustments in salaries and benefits to cope with cost of living adjustments and to attract and retain the necessary skills,” Monjic said.

In the 2017-2018 fiscal year, the number of civil servants increased from 842,900 (average monthly gross income per person 62,341 shillings) to the current 968,425 (average monthly gross income per person 73,540 shillings).

Kenya’s wage bill as a percentage of gross domestic product (GDP) is 7.19% higher than the benchmark target of 7.5%.

Another strategic intervention was to strengthen a fiscally sustainable salary structure, she said the SRC achieved a fiscally sustainable salary structure, thereby enabling government to allocate more resources to development and other government priorities.

“Taking into account the high wage bills, the need to harmonize salaries, the economic situation caused by the pandemic, the withdrawal of the 2024 Finance Bill and other fiscal austerity measures, the SRC froze the salary structure of more than 90% of state-owned enterprises, constitutional commissions and independent offices during the second and third review cycles,” she said.

Monjic said that in order to cushion the impact of rising living costs on civil servants, despite the wage freeze, within the proposed wage structure, civil servants’ salaries will automatically increase in the form of differentials, with an average annual increase of 3% until the highest wage point is reached.

Other strategic interventions among the six agencies include rationalising expenditure through SRC recommendations, particularly between the 2020/2021 and 2023-2024 financial years, where a total of Sh150.89 billion in consultation requests were received.

(email protected)