Labour crisis to hit government as thousands set to retire service

President William Ruto. [File, Standard]

President William Ruto’s administration is facing a labour crisis occasioned by the retirement of an estimated 50,000 workers at a time when the government cannot replace them or pay out their pensions

Government statistics indicate there will be 46,838 job opportunities on either permanent or contractual terms in government departments, which will be occasioned by the civil servants expected to retire between this year and 2029.

According to Isaac Mwaura, 39,361 civil servants are expected to retire within the next five years, based on the June 2024 payroll.

Further, an additional 7,477 officers have retired between September 13, 2023, and June 30, 2023, distributed across the State Departments, County Executives, and County Assemblies.

“The payroll also indicates that 43,976 officers are aged 55 years and older and are expected to retire between this year and 2029, with 7,662 expected to retire in this financial year alone. Additionally, 39,441 officers are serving the government on contractual terms, with their contracts expiring on various dates depending on their periods of engagement,” a government statement said.

As part of the austerity measures President William Ruto promised as a result of the impugned Finance Bill 2024, public servants who reach the retirement age of 60 will be released immediately to allow younger individuals to be hired.

“These measures aim to fulfil his commitment to continually and effectively listen to the people and incorporate their contributions into policy-making and governance,” Mwaura said in a statement.

The country’s public service currently employs 968,425 workers, who gobbled up Sh1.17 trillion in salaries and allowances in the year ending June 2024. Last year, the public sector wage bill was Sh1.1 trillion.

The government’s ambitious move to please the youthful generation who largely participated in the Generation Z protests two months ago may be hit with legal impediments as the law gives pensioners powers to be retained in service until they are paid their pension in full as stipulated in the Pensions Act Section 16A.

Pension claims liabilities have been the government’s main headache, a move that has seen the government embark on a perennial extension of public servant contracts even as thousands of job seekers camp at government gates looking for their pensions.

Last year, in June, the Pensions Department at the National Treasury announced plans to process 85,400 claims over three years, a move that will see the Treasury process an estimated Sh685 billion in pension benefits.

Other than this year’s retirees, the estimates by the National Treasury showed that the number is expected to fall to 28,745 in 2025 and 26,500 in 2026, a move that will see the processing of pensions amounting to Sh189 billion for the year ending June 2024 and a further increase of Sh207 billion for the new financial year, 2024–25.

But with the cash crunch that was witnessed early this year, the government entities failed to remit a combined Sh72.96 billion in pension and pay-as-you-earn (PAYE) deductions.

Data from the Parliamentary Budget Office (PBO) show that unremitted pension dues stood at Sh47.6 billion while PAYE was Sh25.3 billion as at February 2024 a move that would make the Kenya Kwanza administration vision a mirage.

Mwaura refuted the claims saying "The funds needed are properly catered for in the budget for each financial year under the Consolidated Financial Services (CFS) vote head.”

The government spokesperson also denied claims that the retirees would not occasion the labor crisis saying the government would only be seeking to replace the existing vacancies.

“There is no labour crisis since these aren't new vacancies but existing ones. The savings by the employer and contributions by the retiring employee would suffice to pay for their pension. 

Former Public Service, Performance and Delivery Management Cabinet Secretary Moses Kuria’s proposal to convert all public servants from permanent to contractual terms has been abandoned with Mwaura maintaining that it was just a proposal.

Kuria’s proposal contained in the Public Service Transformation Strategy, 2024-2029 dated March this year sought to address the bloated wage bill.

He said half of the country’s tax revenues are consumed by only one million public servants, and then the other half is left to be distributed among all the remaining Kenyans.

“During the wage bill conference we saw that one million public servants consume over 50 per cent of our tax revenues. There is something wrong when 1 million people take half of our tax revenues and the 53 million people take the other one,” the Cs noted while adding that after the realization of his proposal there will be no permanent employee anymore.

The draft report was to introduce Performance Contracting; and staff Performance appraisal system modules, roll out staff redeployment plans across the public sector, conduct Human Resource and skills audits for Ministries, Departments, Counties and Agencies (MDCAS) and update HR data and skills database.

“Public Finance Management (PFM) regulations will be revised while the civil servants will be assigned unified payroll numbers (UPNs) to all cadres of staff and link the numbers to the Integrated Persons Registry Systems-IPRS, Civil registration system and KRA system and eliminate manual payrolls,” the report read.

But  Mwaura has dismissed the report as a mere proposal saying “That was just an opinion of one of the cabinet secretaries. There is no such policy by the government. Each employee serves based on his terms of engagement individually.”