SRC sets out plan to slash wage bill

Salaries and Remuneration Commission (SRC) Chair Lyn Mengich during the launch of the nationwide third public service remuneration review cycle for the period 2021/22-2024/25 at their offices in Nairobi. September 4,2020 [Elvis Ogina, Standard]

Kenya spends nearly half of her revenue on salaries, with the huge expenditure now in the crosshairs of the salaries and Remuneration Commission (SRC).

And while the ratio of the wage bill to revenue at 48.1 per cent in the 2018-19 financial year was lower than the 57.3 per cent in 2013-14, it was still a far cry from the Public Finance Management Act’s target of below 35 per cent.

The wage bill as a percentage of gross domestic product (GDP) dropped from 10.43 per cent in 2013-14 to 7.9 per cent in 2018-19.

SRC Chairperson Lyn Mengich attributed the positive trend to revenue growth and the commission’s implementation of salary structures that are informed by evaluation of jobs’ worth.

“The positive trend is largely as a result of both revenue growth and initiatives by SRC, in collaboration with key stakeholders and players in the government,” she said during the launch of the third public sector remuneration cycle in Nairobi yesterday.

“However, the current wage bill does not match the national economic revenue and growth patterns, thus putting pressure on development and investment share of fiscal budget,” she said.

Ms Mengich said revenue growth and the wage bill had to balance, although she could not predict how soon that could happen.

“The salary structures now being implemented are informed by both the ability of the economy to grow and to pay for that growth, and also the job evaluation process that was done,” she said.

“The job evaluation helps determine relative worth of jobs in the public sector and therefore you can control the salaries. We put a control on what institutions can pay. They cannot go outside off structures that have been advised by the commission.”

As Kenya staggers under the weight of a huge wage bill, SRC is targeting allowances given to public officials, which gnaw into revenue.

“Allowances are a major component of the total compensation package in the public sector, yet there lacks a common policy on its management,” Mengich said.

“In the absence of a common policy framework to guide determination and payment of allowances in the public sector, different institutions pay using different justifications, eligibility criteria, rates and modes of payment,” she added.

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