The Salaries and Remuneration Commission (SRC) may have finally got a much desired wind in its sail to achieve its years-long fight to trim fat allowances paid to civil servants to lower the fast ballooning annual wage bill.
President William Ruto on Thursday announced a Sh300 billion cut to this year’s Sh3.3 trillion budget to save public funds and reduce Kenya’s growing debt burden.
President Ruto, in his inaugural address to Parliament on Thursday, instructed ministries to significantly slash their budgets in a move that could leave civil servants the biggest losers with their fat allowances a low-hanging fruit that could be targeted in the budget cut.
“Our financial situation is not very good. Over the past decade we have sought to close this (financing) gap with public borrowing. This year alone we budgeted to borrow Sh900 billion to budget both development and recurrent expenditure,” said Dr Ruto.
The move is set to see ministries induce steep budget cuts on travel, entertainment, publicity, advertising, office purchases and maintenance as they tighten their belts to effect the Presidential directive.
Civil servants allowances
Allowances paid to civil servants could however face the largest cuts as they cost the exchequer billions of shillings annually helping expand the recurrent expenditure at the expense of development spending.
SRC data shows civil servants are paid some 247 different allowances, which account to 48 per cent of the total wage bill.
The Head of State said Kenya’s recurrent expenditure is “not sustainable”, and has vowed to reverse the sharp growth in recurrent spending driven by annual growth in civils servants’ salaries and wages, pension payments and debt redemptions within three years.
SRC said the allowances to civil servants such as the daily subsistence allowance or per diem accumulate to between 43 per cent and 259 per cent of their salaries leading to a heavy public wage bill.
“Our total (revenue) collections is only Sh2.1 trillion which is only enough to pay debt and salaries, we have to borrow everything else. The government should never borrow to finance recurrent expenditure, it is not sustainable” said Dr Ruto.
SRC, established by the 2010 Constitution to set and review the salaries and benefits of all state officers, has for years struggled to fulfill its mandate often due to lack of goodwill from different arms of government.
The Commission recently found itself in the crosshairs of newly-elected members of parliament (MPs) who threatened to scrap it following its move to scrap their sitting allowances in plenary sessions.
The MPs in August accused the SRC of overstepping its mandate and asked the Parliamentary Service Commission (PSC) to challenge the decision in court.
The SRC said scrapping the MPs’ allowances would save taxpayers over Sh1 billion annually.
SRC might now have found a new ally in Dr Ruto, who says the high recurrent expenditure should be trimmed. This indicates that the SRC could now enjoy more political goodwill to undertake its Constitutional mandate.
“Over the next three years we must reverse this and go back to where the government contributes to the national saving efforts by keeping recurrent expenditure below revenue,” said Dr Ruto.
Dr Ruto’s budget cut also comes at a time the SRC is undertaking drastic reforms in the payment of allowances by harmonizing and rationalizing allowances across the public service.
The Commission says there is a lack of clear and comprehensive policy framework to guide the management of allowances in the public service leading to a proliferation of allowances and different justification, eligibility criteria, rates and modes of payment. SRC had expected to put in place the Allowances Policy Guidelines by the start of the FY 2022/23.
“This led to lack of transparency, inequity and unfairness in coverage, multiplicity and high proportions of allowances to basic salaries, and consequently, disparities in the gross pay paid to public officers,” said SRC.
SRC estimates that the reforms will save the public Sh100 billion annually and wants to cap allowances at a maximum of 40 per cent of a public worker’s gross pay.
It will merge some of the allowances and scrap off others altogether.
In its battle to ease pressure on the wage bill, the SRC in June last year also froze a Sh82 billion salary increment for all civil servants for two years.
Some of the allowances that could be scrapped by SRC include entertainment, responsibility, medical and utility which cover items such as water, electricity and phone calls.
The SRC’s fight to tame the growth of the wage bill will also be boosted by the government’s plans to introduce a common payroll system across government ministries, departments and agencies (MDAs) and counties to clean employee data.
The upgraded Government Human Resource Information System (GHRIS) will help weed out ghost workers in public service, contain spending growth and seal corruption loopholes.
“Upon implementation of the common payroll system across MDAs and counties, we will seek to extend it to some SAGAs (Semi-Autonomous Government Agencies), prioritizing those that benefit from recurrent budget transfers from the national government,” said Treasury.