Cut wage bill or face inflation – SRC

January 25, 2014 2:18 pm
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 The commission warned that Kenya is at risk of paying a wage bill that is unsustainable. Photo/FILE.

The commission warned that Kenya is at risk of paying a wage bill that is unsustainable. Photo/FILE.
NAIROBI, Kenya, Jan 25 – The Salaries and Remuneration Commission has warned that Kenya’s wage bill has grown to alarming rates and could undermine growth unless mitigated.

In a statement, the commission said there is reason to worry after the country’s wage bill shot up from Sh241 billion in 2008/ 2009 to Sh458 billion in 2012/ 2013.

“This is in excess of 50 per cent of the total domestic revenues, which is way above the international best practice of not more than 35 per cent recommended for countries in Sub-Saharan Africa,” the commission said in a statement.

It was particularly concerned that the situation was worsened by the Kenya Revenue Authority’s failure to meet its annual revenue targets to help the government mitigate the crisis.

With the government grappling with how to get funding for the devolved government units, SRC has warned on the need for the government to spend wisely, for it to sustain growth.

“Already, Government’s pressure to meet the increasing recurrent expenditure due to the devolved governments is causing investors to agitate for higher yields,” SRC noted.

Based on the current crisis, SRC is advising the government to find ways of cutting the wage bill to be able to solve the crisis.

The commission is worried that unless permanent solutions of cutting down on the expenditure is found, the high wage bill could land the country into unmanageable inflation which will heavily weigh on the lives of people, who are already grappling with challenges caused by the high cost of living.

The commission warned that Kenya is at risk of paying a wage bill that is unsustainable.

“It also places Kenya at a high risk of being the most uncompetitive country in sub-Saharan region because of paying unsustainable high wages,” SRC said.

Some of its recommendations include developing a National Wages Policy, and carrying out a job evaluation exercise in the public sector.

It also wants a review of the sitting allowances which, it says, has been abused by various government officials and departments.

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