Revealed: The 246 allowances blamed for growing public wage bill

Public institutions have come up with 246 allowances to increase pay for their employees. 

The number of allowances has more than tripled in six years, given that a study in 2014 identified 61, explaining the rising wage bill.

And as a pointer to how this avenue is being exploited to draw funds from public coffers, the expenditure on allowances increased by Sh59 billion between 2016 and last year.

The Salaries and Remuneration Commission has raised concerns about the increasing allowances in the public sector.

The remunerative and facilitative allowances have increased from 31 in 1999, according to the latest study by the commission.

The government spent more than Sh322.5 billion on allowances alone in 2019, compared to Sh263.3 billion in 2016. The SRC says it will trim the hefty allowances through a policy.

“Allowances are a major component of the compensation package in the civil service,” commission chairperson Lyn Cherop Mengich said.

Basic salary

“When we talk about some public sector pay, people think of the basic salary and forget that there is another part of their compensation.”

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

Facilitative allowances are paid to meet expenses incurred by officers in the course of duty. They include daily subsistence and benefits such as medical cover.

Kenya’s wage bill to recurrent expenditure is above 48 per cent.

“Last year, our wage bill was Sh795.2 billion. We need to look at that number as a ratio to revenue. It is currently at 48 per cent of the revenue but used to be about 53 per cent. Our target is 35 per cent of the revenue,” Mrs Mengich said.

She added that id the country does not watch out, the wage bill will crowd out funds for other important matters like development.

Allowances

“The problem with allowances is that every institution defines them differently. They are paid for different reasons. This introduces disparity in pay, contrary to the principle of fair and equitable pay,” Ms Mengich said.

The runaway allowances are in excess of the international standards of not more than 40 per cent of basic salary.

“One of the things we would want to do in the third remuneration cycle is to look at pay structures on a total basis,” she added.

“We have to look at allowances as part of that total pay structure and see how to streamline everything.”

She said the policy framework to guide future allowance payments would be out soon.

“There is no framework and that is why every institution coming up with different allowances. So we want to look at it strategically from a policy perspective,” the SRC boss said.

“We are at the draft stage of the policy. It will then will go through public participation and other processes.”

Many of the latest allowances are accommodation-related.

More than eight new allowances have been created by State institutions. They include hotel, night out, accommodation on new appointment and out of station allowances.

There are even prison risk, heavy bonus and toilet cleaning allowances. The 2014 a study by Deloitte found approximately 61 remunerative allowances.

At the time, allowances in most job groups constituted almost 70 per cent of gross pay.

The allowances doubled the employee’s pay and made it grow by a factor of 10 in other instances.

The study said the genesis of the ballooning wage bill were reforms in public service, which were accelerated in early 2000 when the government begun hiring experts from the private sector.

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