Civil servants to take huge pay cuts in new SRC plan

Now, SRC proposes that maximum allowances government employees earn do not exceed 40 per cent of their gross pay, which is a huge reduction considering that for some employees, allowances have doubled their pay and in some instances increased it by a factor of 10.

In addition, SRC recommends the allowances and other benefits shall be paid in absolute amounts and not as a percentage of the basic or gross salary.

Read: Public servants take salary cut in new pension plan

“At the moment, on average, allowances constitute about 48 per cent of gross pay. However, we have institutions that pay as high as 100 per cent or even more in allowances in comparison to basic pay. So, the disparities are huge when you look at institution to institution. What also that means is that we have caught institutions where the basic salary is just 40 per cent of the total pay,” SRC Chairperson Lyn Mengich said yesterday during a media briefing in Nairobi on the SRC Draft Allowances and Benefits Policy for the Public Sector.

Ms Mengich said the proposed policy changes have been released for public participation and if approved will take effect at the beginning of the new financial year in July, with government institutions given six months to fully implement the adjustments.  Workers’ unions have also been invited to give their input on the proposals.

According to the commission, different government institutions pay allowances using different justifications, eligibility criteria, rates and modes of payment but this will stop once the common policy kicks in.

The SRC aims to reduce the national wage bill, which has almost doubled from Sh434.9 billion in 2012/13 to Sh827 billion in 2019/20. At the time, allowances accounted for 48 per cent of the total wage bill.

The commission reported that it had identified 247 allowances paid to public officers against the 31 payable in 1999. There were 156 allowances in 2014 just after the Jubilee government came into office. The increase is attributed to duplication of the same allowances using different names.

As such, SRC proposes to categorise the allowances into five basic categories — house allowance, commuter allowance, job-related allowances, task-related allowances and labour market adjustment allowances.

Harmonised

“To avoid duplication, redundancy, disparities and varied eligibility criteria, allowances payable in the public service shall be harmonised and streamlined. Allowances and benefits that are paid for similar purposes but have different names shall be merged and renamed. Allowances and benefits whose rationale for payment is redundant and/or overlaps with that of the basic salary shall be abolished,” SRC Commissioner John Monyoncho said.

The new policy will also end inclusion of allowances in the computation of civil servants’ pension and gratuity, a move that will drastically reduce their pension.

The commission said challenges in managing the national wage bill are due to lack of a comprehensive policy on the management of allowances in the public sector, lack of established optimal staffing level to guide on the numbers, mix of competencies that State institutions need, and the continuous push for higher pay from employees.

Eligibility criteria

The government does not have a framework to address the eligibility criteria for paying for services, thus it sometimes ends up paying many times for the same service.

“You have institutions that will pay extraneous allowance and responsibility allowance, but there is a thin line between the two in terms of eligibility criteria and the reason for paying the two. So you will find that in some cases an employee will be paid both, but if you look at the reasons why they are being paid, it is more or less for the same thing,” Ms Mengich said.

She said the commission developed the draft policy following studies conducted in 2013 and 2019, which revealed that State institutions have been creating new allowances to justify illegitimate payments. This has created disparities in remuneration and unpredictability on the wage bill.

When the findings were presented at the National Wage Bill Conference in November 2019, it was resolved that there was a need to develop a common policy and framework to manage allowances in the public sector. The resolutions were adopted last year.

New government employees will be affected immediately when the policy is implemented, while those with active contractual obligations based on the current law will be affected later.

Civil servants

However, the cuts will spare some civil servants who are protected by their contracts as well as those working for parastatals until their employment contracts run out.

But new employees and those who are permanent and pensionable, including those in county governments, will be affected by the capping of allowances at not more than 40 per cent of the monthly gross pay.

Mr Monyoncho added that civil servants have developed a habit of budgeting for facilitative allowances whose basic intention is to compensate one for money used in the process of undertaking an organisation’s duties, indicating that government workers have been receiving compensations for duties not performed.

“There are also some allowances that are obsolete or redundant since the rationale for their payment is no longer justifiable. Such allowances will be abolished,” he said.