Fiscal discipline is the answer to bloated wage bill

By Peter Kenneth

The conversation about the public wage bill has been going on for a while though the intensity of the debate has increased with the recent announcement of the pay cut by the President and his Deputy with an appeal to others to follow suit.

It seems that every time the issue of wastage in public service and the high recurrent expenditure arises, the solutions proposed revolve around the public wage bill. The gesture by the President and his Deputy is commendable even though it will contribute little to reducing the public wage bill.

Recently, we learned that the public wage bill may also be inflated by the presence of ghost workers in the payroll system and also by the fact that some civil servants may be drawing double salaries. In light of these revelations, it is important for government to improve its human resource management system in order to eliminate such inefficiencies. A proper audit should also help to clean up the payroll system to remove workers who have left public service through resignations or natural attrition. The public wage bill could be reduced even further by the elimination of duplication of roles within the public service.

Fiscal discipline is necessary for us to manage the resources we have effectively and efficiently. For us to succeed on this, we must not confine ourselves to the easy options but instead pursue far reaching and deep reforms that are well thought out. Therefore, while it is true that the public wage bill is unsustainable, if the government is committed to reducing the ever rising recurrent expenditure, it must take a much broader approach and check all excesses which would have even greater impact.

One of the major issues that need to be addressed to contain the recurrent expenditure is travel costs of government officials. As the high ranking officials rake in millions in per diem allowances and incur high air travel costs travelling abroad with their large entourages, the middle level officials result to numerous local retreats that also cost the taxpayer millions in per diem allowances as well as accommodation and travel costs. Government should encourage the use of information and communication technology to help cut the need for these expenses.

Another area of concern is the costs of government transport. The government owns far too many vehicles and spends too much money on the maintenance and running costs of its fleet of vehicles. The policy to eliminate fuel guzzlers from the government fleet has attained only a modest measure of success. However, the challenge of cost is not only on consumption but also the maintenance of the vehicles. The government should only own vehicles for essential services.

Reforming our public procurement system would also greatly help to reduce the loss of public resources. As it is now, our public procurement system is poorly designed, costly and badly managed, making it prone to abuse. Public procurement is the foundation of the corruption that government is often accused of. More needs to be done to ensure that every bidder has a fair chance of accessing procurement opportunities without hindrance from rent-seeking operatives and cartels.

Curbing travel and transport expenses and improving the public procurement system as outlined above could help the government save about Sh250 billion per year. This could and should be augmented by an improvement of the tax collection system by the Kenya Revenue Authority. At present, KRA is collecting around Sh 1 trillion per year but it is believed that, with greater efficiency and support from the government, it could collect more than Sh1.5 trillion. Additionally, KRA must deepen and broaden coverage to ensure that revenue is collected from those who are currently not captured by the tax regime; every Kenyan should and must pay their fair share.

The exercise of reduction of public expenditure must not be an end in itself; it must be geared towards improving the lives of Kenyans. The savings accrued from a strict fiscal discipline and the more revenue we can get from improving the efficiency of tax collection would be adequate to allow more investments in security and infrastructure, the two sectors that are critical to reducing the cost of production and driving the cost of living down. Additionally, discipline in the management of our national resources will free up funds to enable the government to carry out its agenda without over-taxing the tax payers or levying heavy taxes on basic commodities.

The pay cut is good because it reflects an appreciation of the reality that many Kenyans face on the part of the leadership. I hope that the people who are pledging to support the President’s gesture will fulfil their pledges so that it is not just a public relations exercise. I recall when MP’s in the 10th parliament pledged to pay taxes and in the end only two ended up paying. However, and more importantly, we must pay attention to the broader issues of the recurrent public expenditure and not just restrict ourselves to a reduction of the public wage bill.

Peter Kenneth was a presidential candidate in the 2013 General Election

3 Replies to “Fiscal discipline is the answer to bloated wage bill”

  1. I do not think that by the President and his deputy “offering” to take a pay cut and urging other public servants to follow suit will help significantly in reducing the huge recurrent expenditure weighing on the tax payer at the expense of development expenditure. Ask yourselves, with a population of 40m, does Kenya need 47 governors? How many governors does Nigeria with 160m people have? What about the US? In Homa-Bay county, the budget for the governor’s office is over 800 million Kenya shillings. What is a 20percent pay cut mean in terms of these bloated budgets for the parastatals, counties, name it.

  2. The clamour for the reduction of the wage bill is misplaced as it entails more than just gimmicks by the president and his deputy. Instead of the leaders engaging in blame game (civil service) and populist gestures (20% pay cut), they should face the problem head on. Let them start with the corruption which stinks to high heaven- the president himself admitted officers in OP are major culprits. After informing us about it, did he expect us to accept and move on or wrap meat with the newspaper that had the news and forget about it.
    I don’t think we need all the commissions, elected and nominated leaders that we were gifted by the constitution. We need a referendum to iron out some of the untenable issues.
    The remaining leaders’ salaries should be slashed and taxed like all other Kenyans. Then reduce the prices of essential goods and services and the cost of doing business in the country and workers will not be wasting precious time fighting for pay rises and also the economy will grow tremendously.

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