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Kenya's wage bill dilemma

Kenya's government knows it needs to downsize the public service, slash salaries and tame corruption to save itself.
Last modified: 14 Mar 2014 22:02

Let me break it down for you. Kenya’s current wage bill stands at 53 percent of the national budget and uses up 55 percent of the country’s revenue collection. This is way beyond the accepted international standard for sub-Saharan Africa, which is 34 percent.

Its workforce now stands at a staggering 700,000 employees, with a wage bill that has shot up from $2.3bn in 2008/2009 to $5.3bn in 2012/2013.

Many people have been poached from the private sector at exorbitant pay packages.

Last year members of parliament convinced the Salaries Commission to increase their allowances. Being in government now is more lucrative than being in the private sector.

But not for everyone. Public university lecturers and non-teaching staff are on strike. Since last year teachers, doctors and nurses have all taken to the streets to demand wage rises.

The government has had to perform a very delicate balancing act to make sure everyone is somewhat happy.

Then there’s the development agenda. In the pipeline are ambitious infrastructure projects with huge budgets. Most will have to be financed using borrowed money.

Devolved government

Many blame Kenya's dilemma on a devolved system of government that was ushered in during the 2013 general election. It was in line with the constitution which was overwhelmingly voted for and adopted in 2010. Now many Kenyans want it overhauled.

The government has 6,444 positions – from governors and their deputies, members of parliament, members of county assemblies, and female representatives.

Then there are the administrative officials who existed before devolution. The list is exhausting. Many say the public sector has too many people duplicating roles. We’re even told that the taxpayer could be paying 300,000 “ghost workers” – people listed as workers who don't work.

If the crisis remains unchecked, the country could shut down. The unsustainably high wages also place Kenya at a high risk of becoming the most uncompetitive country in sub-Saharan Africa.

Economic analysts, the Salaries and Remuneration Commission, whose job is to check public service salaries, and even Uhuru Kenyatta, the president, have all said East Africa's largest economy does not need this.

The vice-chairman of the Salaries and Remuneration Commission Daniel Ogutu said: “Kenya is like a sick patient, does not look sick but on going to the doctor, the patient is told at this rate you’re soon going to collapse. It may be five or 10 years, but you will collapse”.

President Kenyatta, his deputy William Ruto and their cabinet have all taken a pay cut. Other senior civil servants and political leaders are also being compelled to accept a salary cut.

But it doesn’t end with downsizing and reducing salaries. The government needs to check corruption and wastage of public resources. Annually a third of the government’s total expenditure goes to waste.

The government has been told by its chief financiers that what it needs is radical surgery. Downsize the public service, review salaries to match productivity and tame corruption.

Firing civil servants, though, is likely to have disastrous political consequences for the ruling coalition which won the 2013 election partly on a platform of job creation.

But the country must be saved.

The question is, does the government have the will to bite the bullet and live with the consequences? The jury is out.