Take a pay cut or leave, President Uhuru Kenyatta directs top civil servants

President Uhuru Kenyatta (left), Salaries and Remuneration

Commission (SRC) boss Sarah Serem (centre) and Deputy

President William Ruto (right), among other officials, at the

National Debate on Public Wage Bill Sustainability held in

Nairobi Monday. [PHOTO: W. OKWIRI/STANDARD]

 Monday, March 10th 2014 

By MACHARIA KAMAU 

NAIROBI, KENYA: President Uhuru Kenyatta has issued an ultimatum to parastatal chiefs to either take a 20 per cent cut in salary or resign. The move is aimed at managing the burgeoning public sector wage bill that has already spiralled out of control. The President boldly told those not comfortable with reduced pay to quit office, adding that the Government was ready to fire and pay a severance package to any parastatal chief not willing to take a pay cut. The amount of money paid as salaries and allowances to Government employees has doubled over the last five years to about Sh500 billion this financial year from Sh240 billion in the 2008/2009 financial year.

The pay cuts, which are to be affected immediately, are likely to be cascaded to middle-tier and eventually low-cadre civil servants in a move that was set in motion last week. See also: Civil society, ODM criticise Uhuru’s pay cut order Uhuru and his deputy William Ruto took a 20 per cent pay cut. Cabinet secretaries and principal secretaries followed suit, taking a 10 per cent pay cut. President Kenyatta termed the amount of money spent on salaries of civil servants as ‘unsustainable and an unacceptable monster that is threatening the country’s present and future’. INFLATIONARY PRESSURE “All parastatal chiefs will conform with what the Executive has done,” Uhuru said when he opened a forum on public sector wages by the Salaries and Remuneration Commission (SRC) in Nairobi Monday. “There are many Kenyans competent enough who will take the job at lower rates…you either conform or go,” he declared. “My Government is convinced the recent growth in public sector wage bill is unsustainable and unacceptable. The monster threatens not just our future, but our present too, since it compromises the stability of our present economic framework. We have consistently worked hard to tame inflationary pressure, so alleviating the secondary effects of wage demands,” added Uhuru.

The public wage bill has grown more than 100 per cent over the last five years to reach Sh458 billion this financial year and is expected to reach Sh521 billion in the 2014/2015 financial year. SWEEPING REFORMS The pay cut for parastatal chiefs is expected to be complemented by reforms that the President said would be undertaken soon. The reforms are largely in line with recommendations of a taskforce headed by former MP Abdikadir Mohamed. The taskforce recommended sweeping reforms for the parastatals last year, including merging and scrapping some, a move that would significantly bring down both the number of directors within their boards and employees. “We have already carried out the most comprehensive review of parastatals, with recommendations of far-reaching reforms. Rapid implementation of those recommendations will help raise efficiency, save billions of shillings lost, reduce project slippages and deal a blow to open theft,” said Uhuru. NATIONAL CAKE See also: Civil society, ODM criticise Uhuru’s pay cut order At about Sh500 billion, Kenya is paying more than half of the tax collected by the Kenya Revenue Authority as salaries to Government employees. This translates to 13 per cent of the Gross Domestic Product (GDP). This is against global and even regional standards of 35 per cent revenue being spent on public sector wages and the wage bill to GDP ratio at seven per cent The public sector employee count stands at over 655,000, up from about 190,000 in 2002. The Government as an employer accounts for 19 per cent of formal sector employment in Kenya. “If we maintain this trend, we would be dedicating an even larger share of the wealth we produce as a country to the remuneration of public servants,” said the President. “It is good to pay our people well but this must be done in a manner conducive to our development agenda. The slice of our national cake devoted to development expenditure would continue to dwindle if we do not contain pressure of wages.” SRC has embarked on a process that is expected to culminate in the drafting of a national wage bill policy. The institution has embarked on a national campaign to gather views from Kenyans that it said will inform the national wage bill policy.

“The huge wage bill is a reality that we will have to face… if we do not, we will keep borrowing to finance our health facilities or do irrigation… a lasting solution would be a policy and legislation that govern remuneration,” said SRC chairperson Sarah Serem. Caroline Kariuki, chief executive Kenya Private Sector Alliance, said high wages paid to Government employees have placed pressure on the private sector players to match the pay or lose talent to State agencies. Competing to be a better employer in terms of remuneration with the Government has resulted in slowing down investments by private sector players as many resources are tied up in attracting and retaining employees. “The private sector is now compelled to pay higher salaries to retain talent, which has led to reduction in the money available for investments that would lead to job creation,” she said.