Teachers’ demand for high pay risky

Teachers demonstrate to demand salary increment during one of the national teachers’ strikes. [PHOTO: FILE/ STANDARD]

NAIROBI: The Kenyan economy is on the runway battling strong headwinds ahead of takeoff. The control tower is concerned about a prevalent and dangerous tornado called “high wage bill”. The “plane” engines are not powerful enough to move the massive body at a pace that enables it to hit cruise altitude in the desired time. Something has to be done, else we are damned! The public sector is the largest single employer in Kenya with about 680,000 employees in 2014. Of these, teachers comprise more than 275,000 (about 40 per cent of public sector).

Public service sector comprises: The core civil service, disciplined forces, Judiciary, Public Service Commission, public universities, local authorities, parliamentary service, State corporations, counties, and Teachers Service Commission.

Teachers have demanded a 200 per cent salary raise. The amount being demanded had, however, not been factored in the current budget.

Teachers are essentially demanding an increase of their basic pay. Government made an offer for increase of allowances as the current focus is to harmonise all civil servants’ allowances after completing salaries harmonisation some time back. This offer was, however, rejected by the teachers unions terming it a political gimmick. Government has argued that there was no money to fund the new pay demands. Accordingly, the Government plans to spend Sh19.7 billion for harmonising allowances for all civil servants in the 2015/16 national budget. Government has a unified plan for all civil servants and cannot implement one pay review for some (teachers) and leave out other civil servants.

Teachers’ strikes in Kenya have become a perennial spectacle. It is hard to recall a year in the recent past when teachers didn’t go on strike. This is symptomatic of a problem that requires a lasting solution. It may be of benefit to learn how other countries in the world have addressed the issue. Whatever action taken must balance the critical measures of productivity and affordability.

Wage Bill Vs Revenue Collection

In the period 2013/14, analysis of Public Sector wage has shown that the Wage Bill stood at the tune of 52 per cent of revenue collection against a recommended level of 35 per cent. A look at the state of wage bill as percentage of Revenue for Comparators across the world indicates how bad Kenya is doing.

Whereas Africa’s wage to revenue ratio averages 33 per cent, Kenya’s percentage is dangerously high, at 52 per cent of revenue collected. It is safe to say that with these comparisons, something may have gone wrong somewhere along the way. It may mean that we are not as productive as we should be. We must speedily find our way back to the right path or else, we face the fate of missed dreams.

Economic Development

 

The relationship between wage bill and a GDP is useful in assessing the long term sustainability and economic growth. It gives an indication of how much of a country’s economic activity goes in paying salaries as opposed to other development needs.

The government is grappling with a heavy wage bill that remains a major threat of transformation of the economy through investment, industrialisation and job creation. Ceding ground on teacher demands may push recurrent expenditure to 90 per cent of the budget. This does not bode well for long term economic development.

According to the Salaries and Remuneration Commission (SRC), in 2014, 57 per cent of recurrent expenditure is attributed to salaries. Wage bill as a ratio of GDP stood at 12.2 per cent (that’s about Sh570 billion).

The SRC has warned that if teachers demands are acceded to, the public wage bill would rise to Sh823 billion — a Sh255 billion increase. Unregulated and unsustainable increase in the wage bill limits the Government’s ability to deliver on services.

The SRC chairperson Sarah Serem, has rightly argued that “Any imbalance between expenditure and revenue will result in unsustainable deficit financing and increased taxation,” This will drag the economy by hurting investment due to the rise in cost of doing business.

National Productivity

Labour Statistics indicate that Kenya’s Labour productivity has averaged at 3.7 per cent over the last ten years compared to average wage rate of growth of more than ten per cent. Other countries’ productivities are way ahead e.g. USA is at 44 per cent per annum, Japan 40 per cent, Singapore 40 per cent Malaysia 36 per cent per annum. This is definitely a major threat to our long term prosperity unless something is done about this state of affairs. Strategic action must be taken urgently.

Future Economic Growth

Kenya aims to attain socio-economic progress in line with the Vision 2030 blue print. To keep these milestones within reach, Government must ensure stimulation of investment and job creation through effective management of the wage bill. In particular, there has to be a dedicated commitment to greater development expenditure and manage a healthy balance between recurrent and development expenditure.

The ongoing enforcement of the Public Financial Management law requirement that 30 per cent of expenditure should go to development must continue. This should be supplemented by the ongoing harmonisation of allowances for civil servants, which ensures Government employees are paid equitably while endeavouring to plug any material salary disparities.

This may see realisation of the double digit economic growth promised in the Jubilee manifesto in 2013.

Kenya has great potential to be one of Africa’s success stories given its growing and youthful population, a dynamic private sector, a new Constitution, and its pivotal role in East Africa. However, the country is facing challenges of poverty, inequality, governance, low investment and low productivity to achieve rapid, sustained growth rates that will transform the lives of ordinary citizens. Devolution is a challenge, but also an opportunity for greater distribution of economic opportunities. Allowing the recurrent expense to balloon will move the recurrent: Development expenditure ratio from bad to worse. This doesn’t bode well for socio economic development.

Recommendations

• Dialogue should take priority over stalling of learning in schools.

• Government should move with speed to harmonise allowances for all civil servants including teachers.

• Develop a long term civil servants benefits strategy aligned to the vision 2030 development blue print to avoid derailing the economic development agenda of the country. SRC should play a key role in this.

• A long term plan should be developed to train school heads and their deputies on performance management. This will ensure that as teachers’ perks are improved, it’s a reflection of both inflation and their output. Labour statistics indicate that Kenya’s Labour productivity has averaged at 3.7 per cent (compared to more than 40 per cent in other countries) over the last ten years compared to average wage rate of growth of over ten per cent. You can’t spend what you have not produced and as such, the productivity rate must rise above the wage growth rate.

• The SRC is mandated by law to advise the national and county governments on the harmonisation, equity and fairness of remuneration for the attraction and retention of requisite skills in the public sector. As such, SRC should at all times be a key player in the harmonisation of salaries and allowances for civil servants.

• Enact laws that support increase in national productivity rather than encouraging perennial wage debates. Kenya should embrace the principle of “equal pay for work of equal value”, and target output (given productivity) as an instrument to enhance pay. Private schools don’t experience strikes because pay is pegged on productivity. Students participate in evaluation of teachers’ performance.

• Affordability must be considered before taking decisions on pay raises. Ghana took equity approach before determining, affordability. This resulted in worsening sustainability (After the job evaluation, the wage bill grew by more than 60 per cent).

I wish all stakeholders God’s speed in realising the desired outcomes that are in the best interest of our country. We must ensure that fulfillment of the promise of a brighter future for the next generation becomes a solid reality.

The writer is ICPAK vice chairman