Civil servants face allowances squeeze

New proposals seek to reduce the hefty allowances that civil servants get and narrow salary differences for workers in the same job groups. 

The Salaries and Remuneration Commission now wants allowances not to constitute more than 40 per cent of the monthly gross pay.

The guidelines were last reviewed in 2015. In some cases, the figure doubles a worker’s monthly pay.

“The SRC will continue to review and consolidate remunerative and facilitative allowances to make the proportion of basic pay to gross salary to be no less than 60 per cent,” reads the document.

“Hidden allowances create inequity and unfavourable pay. So we are basically saying the target is to have 60 per cent of your pay in basic salary and the rest in allowances,” explained SRC chairperson Lyn Mengich.

To ensure the gap between those who earn the lowest and highest salaries is significantly reduced, the SRC proposes “a ratio of at most 1.5 times between the grade minimum and grade maximum salary points.”

Negotiating pay

The proposed guidelines, that will be subjected to public participation, are expected to guide the employers, trade unions, Labour Court, and the commission when negotiating pay for workers to ensure equity and fairness.

If adopted, the remuneration guidelines will see the reduction of the wage bill by approximately Sh100 billion annually.

There are currently over 247 remunerative and facilitative allowances, up from 31 in 1999, payable within the public sector.

“The remuneration guidelines are expected to set a roadmap that will guide employers when negotiating with the trade unions or even the commission when we are making decisions around salary reviews,” said Mrs Mengich.

“The whole objective is for the wage bill to get to ratios that have been defined in the Public Finance Management (PFM) Act.”

The wage bill in the public sector comprises basic salaries, remunerative allowances such as house and commuter; hardship, extraneous, domestic, and risk allowances.

Meet expenses

Facilitative allowances paid to meet expenses incurred by officers in the course of duty such as daily subsistence allowance and benefits such as medical cover have all had an impact on the wage bill.

Kenya’s wage bill to recurrent expenditure ratio is above 48 per cent, but the PFM Act sets a minimum of 35 per cent.

SRC is concerned that allowances are a major component of the compensation package in the public sector, yet they are hidden during salary negotiations while only the basic pay is talked about.

“Our analysis is that on average, 48 per cent of pay is in allowances. And I am talking about the average because in some institutions it is more than 100 per cent.”

SRC also wants collective bargaining agreements (CBAs) and revision of salaries in the public sector to be in line with productivity increases in order to protect Kenya’s competitiveness and ensure sustained economic growth and employment creation.

Further, remuneration and benefits shall not be reviewed more than once in four years; and review of remuneration and benefits shall coincide with the renewal of the collective bargaining agreements and/or employment contracts. Salary reviews will also be based on productivity.