Stable jobs? Why public sector worker purchasing power is dropping

Public sector workers’ purchasing power declined in 2025 despite modest wage growth. [Courtesy]

Public sector workers are the most affected by the skyrocketing cost of living, with the latest data showing their purchasing power shrank further in 2025 despite improved pay. 

Compared to their private sector counterparts, the public sector workers estimated real average wage earnings per employee dropped in the period to Sh600,552 in 2025.

This is because the estimated real average earnings per employee for the private sector grew from Sh689,300 to Sh716,087. 

The data contained in the 2026 Economic Survey Report by the Kenya National Bureau of Statistics (KNBS) shows that while estimated real average wage earnings per employee for the private sector have been recovering post-COVID, for the public sector, it has been dropping. 

The estimated real average wage earnings per employee is a metric used to measure the purchasing power of one’s pay against inflation. An increase means one’s pay is growing faster than the inflation rate. 

Real average wage earnings are different from average wage earnings, as the latter is the nominal or actual amount an employee makes within the set period.  According to the KNBS report, average wage earnings per employee for both the public and private sectors grew from Sh933,085 in 2024 to Sh988,177 in 2025.

This nominal annual salary increase has been steadily growing for the last five years, with Sh827,337 in 2021, Sh865,560 in 2022 and Sh894,232 in 2023. 

For the public sector, this nominal growth has been fluctuating: Sh823,585 in 2021, Sh842,872 in 2022, Sh838,731 in 2023, Sh861,389 in 2024 and Sh874,273 in 2025. 

For the estimated real wage earnings per employee (nominal wages calculated against inflation), 2025 was an outlier as this figure improved for the first time in the last five years. 

Estimated real wage earnings per employee (for both public and private sectors) grew to Sh678,795 in 2025 from Sh665,418 in 2024.

This figure had been dropping from Sh718,735 in 2021, Sh696,816 in 2022, Sh667,285 in 2023, Sh665,418 in 2024, to a jump in 2025 of Sh678,795.  But while the overall estimated real wage earnings per employee improved in 2025, for the public sector, it dropped further. This is the same improvement for the private sector, making workers in these businesses more cushioned against inflation.  Data from the report shows that estimated real wage earnings per employee in the private sector stood at Sh716,087 in 2025, having improved from Sh689,300 in 2024 and Sh686,450 in 2023. 

This is while in the public sector, the same has seen a consistent decline from Sh715,475 in 2021, Sh678,552 in 2022, Sh625,869 in 2023, Sh614,288 in 2024, to Sh600,552 in 2025. 

This means, simply, that a salary of Sh57,441 a month for a private sector worker in 2024 was worth Sh59,673 in 2025. For a public sector worker, there was a drop from Sh51,190 a month to Sh50,046 in the same period. 

This amount is below the estimated real average wage earning per employee for both public and private sectors, which stands at Sh56,566. 

“In 2025, the real average earnings per employee reached Sh678,800, an increase from Sh665,400 in 2024. The private sector experienced a growth of 3.9 per cent, with earnings rising to Sh716,100. Conversely, the public sector experienced a decline of 2.2 per cent, bringing real average earnings down to Sh600,600 during the same period,” reads the report. 

This drop, however, can be partly explained by the small margin of nominal increase in average earnings per employee when compared to the private sector. 

The data shows average wage earnings per employee in the private sector improved to Sh1.04 million in 2025 compared to Sh966,575 in 2024. This is an improvement of 7.85 per cent. 

This is while employees in the public sector realised an annual average increase of Sh874,273 in 2025 from Sh861,389 in 2024. This is an improvement of 1.49 per cent. 

“In the year under review, overall annual earnings increased by 5.9 per cent to Sh988.200. The average annual earnings in the private sector increased by 7.9 per cent to Sh1 million in 2025, while earnings in the public sector increased by 1.5 per cent to Sh874,300,” the KNBS report says. 

Public sector jobs usually come with the allure of tenure, which makes these opportunities attractive for job seekers, despite the fact that at times the same roles attract more pay in the private sector. 

Several attempts have been initiated to make government jobs contractual to improve performance and ease the wage bill through pension liabilities, but they never get to see the light of day, at least not in full. Data from the KNBS report shows government jobs are still more attractive to workers compared to the private sector. This is despite the private sector having more workers than the public sector. 

The 2026 Economic Survey Report shows wage employment in the public sector grew by 4.6 per cent in 2025, above the national average of 3.1 per cent. 

As of 2025, there were 1.07 million wage employees in the public sector compared to 2.245 million in the private sector. In total, wage employment stands at 3.32 million, a growth of 3.1 per cent from 3.22 million in 2024. 

As it is the norm, public administration and defence realised the most growth in wage employment in 2025 by 6.6 per cent to 375,100 from 351,800 in 2024. This is followed by health and social work, a 5.5 per cent growth, to 59,500 and wholesale and retail and repair of motor vehicles, which grew by 4.8 per cent, to 2,200. 

The report says that in 2025, the Teachers Service Commission registered an increase of 6.2 per cent in wage employment to 436,300, while ministries and other extra-budgetary institutions registered an increase of 2.9 per cent. 

“Employment in County Governments increased by 5.5 per cent to 239,000, while employment in corporations controlled by the Government, as well as in Parastatal bodies, each grew by 1.3 per cent in 2025,” the report says.