President-elect Uhuru Kenyatta (R) shares a word with Finance Minister Njeru Githae at a past function. Photo/FILE NATION
Uhuru makes his first misstep!
Wage burden heavy, says Uhuru
President-elect Uhuru Kenyatta and deputy William Ruto have warned that the Kenyan wage bill is not sustainable and that the next government would consider freezing pay rises or effecting salary cuts.
The two said that Kenya risked being the most uncompetitive country in the sub-Saharan region because of paying high wages that were not sustainable.
“We need to focus on this issue of an unsustainable wage bill, we must address it and align the rates with the level of our economy,” said Mr Kenyatta.
He noted that the government would also work around reducing the cost of basic commodities so that even if wages were slashed, Kenyans would still afford basic commodities and lead descent lives that the economy could sustain.
Deputy President-elect Ruto said that Kenya lagged behind in development because development funds were used to pay excess wages that did not generate income.
Mr Ruto indicated that they would “put facts on the table” to harmonise wages and focus on reducing the cost of living instead of continuous salary increments.
He noted that Kenya spent 12 per cent of its total GDP paying wages yet other countries in sub-Saharan Africa limit themselves to around six to seven per cent which is the recommended global average that can leave sufficient resources for growth.
“This is double the normal and is totally unsustainable,” said Mr Ruto.
The two said their government would invest in production of basic food commodities and the provision of basic amenities like health care which would reduce the cost of living to be in sync with reduced wages.
Efforts would be made to grow the Kenyan economy by double digits as is the case in countries like Ethiopia and Ghana, they said.
Their remarks come a day after the Salaries and Remuneration Commission reduced MPs’ perks by 37 per cent from Sh850,000 to Sh532,500.
The commission — which is seeking ways to reduce the public wage bill — has ensured that incoming MPs will not enjoy the privileges of duty-free vehicles like their predecessors.
Instead, the MPs will be given a Sh7 million loan to buy a vehicle of their choice and repay it with a three per cent interest rate. The loan, which is an entitlement, will have to be repaid in five years or before the end of the term of the 11th Parliament.
The new SRC terms have also put a cap on sitting allowances for MPs who are members of House committees of the National Assembly and Senate.
The Treasury in January hinted that there could be massive job cuts and salary reviews in the public service from July. This will help the government manage a wage bill inflated by Sh40 billion to get teachers, lecturers and doctors back to work.
“Difficult choices must be made to ensure that scarce resources are directed to priority areas of economic development,” Finance minister Njeru Githae said in the Budget Policy Paper released in January.
Among the listed choices was layoffs and wage increase freezes.
“Salary pressures will also impact on pensions hence increasing the government contingent liability,” Treasury permanent secretary Joseph Kinyua said in the paper.
According to the Economic Survey 2012, Kenya had about 220,000 central government employees as at 2011.