SRC Wants Civil Servant’s allowances Capped at 60%
A shocker awaits civil servants and state officers in renewed efforts by the Salaries and Remuneration Commission to tame the country’s ballooning wage bill.
The salaries agency wants allowances paid to state officers and other public officers capped at 60 per cent of their basic pay.
This radical proposal could end the incessant clamour by civil servants, public officers and top government officials for a pay rise every year.
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The cap would save the government as much as Sh100 billion annually as the state tries to align employees’ pay and control the ballooning wage bill.
SRC argues as much as 48 per cent of the public sector wage bill is comprised of allowances paid to government employees.
Just 13 types of allowances account for as much as 80 per cent of the payments for government workers’ allowances.
The SRC has published draft guidelines to ensure all allowances earned by public sector workers are linked to their actual contributions.
The new tough rules are subject to public input. The SRC has a constitutional mandate to set set salaries and allowances for public and state officers.
After public participation, it may only need Cabinet approval and publication in the Kenya Gazette.
“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,” the proposed guidelines read.
The Institute of the Public Accountants of Kenya (IPAK) warned that BBI is likely to have negative ramifications for the country’s wage bill.
According to a report on IPAK’s website on Wednesday, chair Rose Mwaura said BBI promoters need to examine the financial implications of expanded government.
It recommends, among others, an expanded Executive and 70 more constituencies.
“The imminent public wage bill will crowd out the scarce resources needed to implement the huge budget in Kenya for sustained economic growth,” Mwaura said.
The SRC said that last year’s allowances amounted to Sh322 billion, hence, the government could have saved as much as Sh42 billion if the 60 per cent rule had applied.
The SRC wants the Employment and Labour Relations Court, public sector employers, workers and trade unions to discourage any reviews that favour allowances exceeding basic pay.
The rules would apply to all public sector institutions to end double payments and reduce distortions in earnings.
The Lyn Mengich-led commission reported that allowances that supplement basic pay account for 48.1 per cent of the country’s total wage bill.
Of the allowances, 13 account for 80 per cent of expenditure on allowances and 38 per cent of the governments’ expenditure on gross pay.
House allowance alone, the SRC said, accounts for 33 per cent of expenditure on allowances and 16 per cent of expenses on gross pay.
The public wage bill has been increasing from Sh465 billion in 2012-13 to Sh615 billion in 2015-16, Sh664 billion in 2016-17, Sh733 billion in 2017-18 and Sh795 billion up to June 2019.
The Public Finance Management Act (Regulations), 2015, recommends the wage bill should not exceed 35 per cent of the national revenue.
Treasury recently said it was working on a strategy to reduce the wage bill to less than 7.5 per cent of the GDP in line with international guidelines.
“Some of the allowances earned by public sector workers, however, may not be linked to human capital-based elements of remuneration,” the commission says.
SRC, in backing the fresh bid to review paycheques, said the purpose for which allowances are paid for some positions are already factored into the job evaluation exercise.
“This may result into double payment and increase earnings distortion,” the SRC guidelines read.
WOE UNTO UNIONS
The SRC is further seeking to make it tough for labour movements to make haphazard demands for salary reviews.
Should the guidelines be approved, remuneration and benefits shall not be reviewed more than once in four years.
The commission says going forward, the level and timing of pay rises will be based on the ability of the economy to sustain increased labour costs.
“Review of remuneration and benefits shall coincide with the renewal of collective bargaining agreements and/or employment contracts,” the proposed rules read.
Consequently, the SRC provides that any demand for salary review shall be subject to affordability and fiscal sustainability.
Labour movements would be required to ensure any proposal for remuneration in the public sector is accompanied by an analysis of its likely affordability and fiscal impact.
“The foregoing provisions would prohibit public sector employers and trade unions or other such representatives from concluding collective bargaining negotiations on remuneration and other terms and conditions of employment without first obtaining advice from the SRC,” it says.
For uniformity of terms, public sector institutions will not award pay increases simply because they have the ability to pay.
The capacity to pay shall not be regarded as a necessary and sufficient condition for granting a raise.
The SRC says this will be so if one group of public sector workers will be paid out of step with comparable groups in the sector.
“Salary demands based on trends or awards in other occupations or grade, or public sector institutions or private sector per se shall not be allowed,” the rules read.
Pay reviews shall take into account individual employee performance, institutional and sector productivity and performance of the national economy as prime elements.
Parity with the private sector will not be considered as a goal of the public sector compensation systems, the SRC said.
Collective Bargaining Agreements and pay reviews will have to be informed by an increase in productivity.
“Kenya aspires to establish a productivity-linked remuneration system with a pay structure that has fixed and flexible components, and productivity-based payments made as one-off so as not to become a permanent part of the basic pay,” the rules read.
The salaries team is also seeking to end the disparities in salaries to civil servants, county government employees, teachers and state corporation employees.
The commission says the ratio between the highest and lowest earners in the sector is wanting, being between 4.8 and 22.8 – against the international norm of seven.
The SRC says there are serious differences in pay, even for people falling within a similar pay scale. These gaps are between 13 per cent and 293 per cent for county governments and between 35 per cent and 186.8 per cent for teachers.
Wage differentials in service and commercial state corporations are said to be more pronounced at higher bands.
In this regard, the SRC seeks to narrow the ranges within and between the grades to a ratio of 1.5 times between the grade minimum and maximum salary points.
PUSH FOR PERKS
The rules have been published at a time doctors are pushing the government over medical insurance. Knut secretary general Wilson Sossion has also threatened to stage a teachers’ strike in January.
Doctors are already receiving allowances for rent from Sh18,000, commuting (Sh8,000), health risk (Sh20,000), non-practicing from Sh32,000, leave travel Sh6,000; emergency call Sh72,000 and health workers’ extraneous expenses of Sh30,000.
State officers enjoy an array of benefits funded by taxpayers. They include the President, Deputy President, Cabinet Secretaries, Chief of Defence Forces, PSs and the Inspector General of Police
They are provided official transport, medical benefits of as much as Sh10 million for inpatient cover, retirement benefits, group life insurance of three times their annual basic pay, group personal accident cover, daily subsistence allowance, airtime of Sh20,000 per month, official residences and security.
Members of Parliament are entitled to committee sitting allowances – Sh8,000 for chairmen and Sh5,000 for members; transport allowances from 375 kilometres, medical benefits for themselves, spouses and four children, retirement perks, group life insurance and group personal accident cover.
Lawmakers also receive a daily subsistence allowance, airtime of Sh15,000 per month, security and official residences for speakers of the Senate and National Assembly.
Governors and other county staff are also entitled to, among other benefits, daily subsistence allowance and airtime – Sh20,000 for governor, Sh15,000 for deputy governor, Sh10,000 for county assembly speaker and Sh5,000 for MCAs.
Full-time officers in constitutional commissions and independent offices are entitled to official transport, medical benefits, retirement perks, group life insurance, daily subsistence allowance airtime of Sh15,000 and security.
The Chief Justice, Deputy Chief Justice and judges are entitled to official transport, medical cover, special judicial duty allowance, non-practicing allowances, daily subsistence allowance airtime and security.
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