NAIROBI, Kenya, Feb 13 – The Salaries and Remunerations Commission (SRC) says it will review allowances paid to civil servants following revelations that the perks are to blame for the huge public service wage bill.
This follows the release of a report by the Kenya Institute of Public Policy Research and Analysis (KIPPRA) that revealed that some constitutional office holders were earning hefty allowances.
Speaking during a breakfast meeting on Thursday, SRC Vice Chairman Daniel Ogutu stated that in many instances, the allowances paid are more than 100 percent of basic pay and he pointed out that they will be seeking views from stakeholders on how to streamline them.
“Unless the allowances are arrested, we may not get where we want to be. We are now working on the allowances and we have a task team working on it within a three month period. During this time, we must have come up with the way forward, either consolidating some allowances, abolishing them, or advising on how to consolidate them within the pay system,” he said.
He stated that this will further lead to an increase in the country’s Gross Domestic Product (GDP).
His sentiments were echoed by the SRC Chairperson Sarah Serem who stated that the money recovered from this initiative could be used to increase the country’s productivity in different sectors.
“Look at the implications of savings from the high wage bill. If we are talking about 12.5 percent of the GDP going to the wage bill, suppose we save just one percent of it, what is the implication? Assuming that the current level of the 12.4 percent comes to slightly below Sh500 billion if we saved one percent of that, in two years, we will have Sh76 billion which can be released to do quite a number of development agendas.”
“We can do three additional superhighways akin to the Thika Superhighway, each costing Sh25 billion. That has an impact in the development of this country. We can build additional level five hospitals in every county at a cost of Sh1.62 billion and assuming we spread it out, we can improve other additional infrastructure.”
According to the report which was presented by KIPPRA Executive Director John Omiti, savings from the huge wage bill could be used for international trade.
“Our current account balance will worsen and our trade balance with other countries will also worsen. This means that we have to depend more on imports since our exports will be relatively constrained because of constraints in development,” he observed. “If we reduce the wage bill, there are gains which will be made and these will increase from the current year, the next year and even the third year. For Kenyans, we need to find ways and means of reducing the wage bill.”
He emphasised that the current wage bill was not sustainable and stated the need to ensure that the economy proceeds on a sustained growth path.
“Our economy is projected to grow at a rate of about five to six percent growth but if our wage bill drives us from that desired path, we may see reduced growth opportunities of the economy. There is also need to harmonise public private wage differentials so that as an economy, we give clear signals in terms of productivity,” he said.
He further underscored that the monies derived from reducing the pubic wage bill can be used to fund development projects in the country.
“Wages alone cannot make an economy grow. You need to invest in innovation, technology and productivity and this is what will drive competitiveness of an economy like ours. There is also need to strike a balance between service delivery and the public wage bill,” he stated.