According to a report in the Business Daily, “Parliament has questioned a Sh32.7 billion increase in public wages and benefits despite devolution of several functions and shifting of personnel to counties. The Budget and Appropriation Committee has asked the Treasury to explain its projection that the wage bill will rise from Sh263 billion to Sh295.7 billion in the financial year starting July 2013, a 12.4 per cent rise.”
While it is a welcome move that the National Assembly is finally questioning the public wage bill, it seems that National Assembly is a bit late to the gate.
It’s a well known fact that between the last administration and this one there has been a speedy growth of the public wage. The Salaries and Remuneration Commission has attributed the rise of the wage bill to not only the added layers of the government introduced by the devolved system, but also to the increase in a salaries, as well the substantial allowances paid out by government.
According to the Commission, “Kenya’s total wage bill in the public sector has continued to increase in nominal terms…due to an increase in the number of employees as well as an increase in the average wage. A signiﬁcant amount of employee compensation is in allowances such as: personal allowance, hardship allowance, entertainment allowance and risks allowances. The Kenyan average annual growth rate in wage bill over the last three years is about 13% (for 2012/13 alone, the increase was by 30%), well above the nominal GDP growth of about 4% and population growth rate of about 3%.”
The National Treasury reports the country’s wage bill as being 12% of GDP, the ratio of recurrent expenditure to the total budget is 69%. The public sector wage bill, as at 30th June, 2013, was about 12%, which is higher than the internationally desirable level of not more than 7% and government target of not more than 8%. The Central Government wage bill as a share of GDP is estimated to be 7.8% compared to 6.5% for Africa which is also the government target while the Central Government wage bill took about 35% of Government total revenue and with a debt service of about 17.2% leaving less than 48% of the total revenue for other operations.
Looking at these figures I am sure Kenyans wonder whether the millions of funded posts in the public sector and the rise in their wages over the past few years is being matched by productivity increases.
The Salaries and Remuneration Commission has been warning the government about the country’s unsustainable wage bill ever since it was first established. Lowering the country’s wage bill was also one of the Jubilee coalition’s flagship campaign promises, as well as a focus of the President’s national address in 2013. So it would be great to see more concrete steps towards this.
The fact is that if the public wage continues to rise it will not only be unsustainable but it will definitely begin to crowd out other important forms of government expenditure, infrastructural development and essential services i.e. education, health care.