Public wage bill up 10pc despite freeze on hiring

Lyn Cherop Mengich

Salaries and Remuneration Commission chairperson Lyn Cherop Mengich.

Photo credit: File | Nation Media Group

Salaries and wages paid to public servants shot up by Sh34.17 billion over the past year despite a three-year freeze on hiring of new civil servants in a bid to tame the ballooning public wage bill.

National Treasury data shows public servants’ salaries and wages hit Sh386.38 billion in the nine months to March, which is a 9.7 percent increase from Sh352.21 billion in March last year as the holes in priority areas.

Data from the Kenya National Bureau of Statistics (KNBS) shows the government hired 38,500 new staff last year increasing the number of workers in the public sector to 923,100 up from 884,600 in the previous year. This comes just weeks after President Uhuru Kenyatta announced a 12 percent increase in the minimum wage to cushion workers from the biting cost of leaving, which will further pile upward pressure on the public wage bill.

The rise was the first in three years at a time annual inflation has been ranging between five and six percent each year pushing up the cost of goods and eroding the purchasing power of households.

Five-year hiring freeze

The government also this year lifted a five-year hiring freeze in parastatals allowing State entities to employ new staff without State approval.

The wage bill increase comes at a time the Treasury has in recent budget cycles ordered ministries, departments and agencies (MDAs) not to allocate resources for new recruitment, interns or upgrading of job groups unless they get approval from Treasury.

The government has been at pains to stay within Public Finance Management Regulations, 2015 that guide the Treasury not to exceed expenditure on compensation to employees by 35 percent of the equitable revenue share.

Taming public wage bill is also one of the fiscal reforms that Kenya has committed to undertake as part of its 38-month loan facility from the International Monetary Fund (IMF) and in December told the lender it aims to contain the ratio of the government wage bill to the gross domestic product (GDP).

“Our target is to achieve a decline of 0.5 percent between FY2020/21 and FY2023/24. This will be accomplished through continued restraint in hiring and compensation,” Treasury said, adding that it would maintain its recent policy of only hiring when funding is available.

The Treasury expects to spend Sh507 billion in compensation to public servants by the end of June.