Civil servants are set to receive a fatter pay cheque from July following recommendations by the Salaries and Remuneration Commission (SRC) that will translate to a higher budgetary allocation in the 2023/24 Budget. 

Documents tabled before the Departmental Committee on Finance and National Planning, which is led by Molo MP Kuria Kimani, the Treasury has allocated Sh17.7 billion to the salaries commission. The money will be used to clear pending job evaluations. 

Treasury and SRC are still in talks about the nature of the salary increment that civil servants will be given and once the deal is agreed on, the money will be released to various Ministries, Departments, and Agencies (MDAs). 

Should this be implemented, it will end a two-year freeze on salary reviews for civil servants, even as the increase comes on the back of a liquidity crunch that has hit the government leading to among others, a salary delay in March, as the government soaks pressure to contain a bloated public wage bill and large debt repayment obligations. 

“For public servants’ salary increment provisions, we have Sh17.7 billion, and this has been provided for the implementation of SRC job evaluation,” Treasury Principle Secretary Chris Kiptoo told the committee yesterday. 

Policy interventions

This amount is part of Sh70.96 billion that the Treasury has allocated to meet key policy interventions under recurrent expenditure vote. In addition, there is also Sh2.1 billion set aside to clear contractual obligations to the National Health Insurance Fund (NHIF) that is in arrears amounting to over Sh7 billion. 

SRC froze salary increments for public servants in 2021 to allow the government to stabilise the economy owing to the shocks triggered by Covid-19. This has been recalled even though the country is still battling post-pandemic and other shocks, including prolonged drought and the Russia-Ukraine way. 

In February 2023, SRC chairperson Lynn Mengich announced that the commission was reviewing remuneration and benefits in the public service to align with Section 11 of the SRC Act, 2011, which has set a four-year review cycle. 

The first cycle covered the period between 2013 and 2017 and the second covered the years from 2017 to 2022 though the second face was never completed due to the Covid-triggered freeze in 2021. 

SRC had predicted in February that there might not be a significant change in salaries for most jobs but undertook the evaluation to develop the job grading structure. SRC is already undertaking far-reaching reforms in the payment of allowances by harmonising and rationalising perks across the public service. 

There are also plans to increase civil servants’ house allowances amid a surge in rental costs especially in Nairobi, Kisumu, Nakuru and Mombasa cities. 

Salary reviews

In the six months to December last year, SRC had approved pay rise requests worth Sh2.18 billion. The requests included bonuses/rewards, salary reviews, allowances and Collective Bargaining Agreements (CBAs). 

The impending salary increment, if implemented, will come as a reprieve to the over 954,000 civil servants financially pressured by the tough economic situation that has pushed up the cost of living.

Although the country’s inflation rate stood at 7.2 per cent as of April, down from 9.2 in December, this is yet to be felt by workers due to high food and fuel prices. The cost of living has burdened many Kenyans as school fees, rent payments, food and commodity prices, and transport costs have all gone up in the past two years yet salaries remained largely stagnant.

A rise in public sector earnings could however spark agitation by private sector workers who could also push for pay increases to match their public service counterparts. During the recent Labour Day celebrations, President William Ruto announced a new salaries policy aimed at setting equal pay for workers in the public and private sectors. 

Salary delays for public sector workers between February and March hit civil servants but the situation is currently improving as the Treasury settles the arrear in batches. Pay delays, though not a phenomenon afflicting only civil servants, have always left them battling loan sanctions in addition to affecting remittance of statutory deductions, such as retirement savings. 

Despite the plans to increase salaries, President Ruto has said that his government will not borrow to meet public sector salary payments, which consumes almost half of all government revenues. He said on Sunday that it was preferable for the government to delay salaries than to borrow to pay its workers.

With the Budget more likely to pass than not when it is table in Parliament next month, Kenyans must now brace for more tax pain to finance the Sh3.6 trillion spending plan, after President William Ruto decried the country’s low revenue to Gross Domestic Product (GDP) ratio relative to her peers. In an interview last Sunday, President Ruto expressed concerns over the low revenue-to-GDP ratio, indicating that the country may face higher taxation in future. 

Tax revenue

He said that Kenya’s tax revenue currently stands at 14 per cent of GDP, significantly lower than other nations such as Morocco, Tunisia and South Africa, which have ratios exceeding 20 per cent. 

“I want to tell my countrymen and women that we are not over-taxing ourselves. When Kibaki came to power we were collecting about Sh200 billion. When he left, we were collecting about Sh800 billion,” Ruto said. “The real issue is that our tax as a percentage of GDP is still way below what our peers have.” 

His statement comes at a time when some Kenyans are concerned over their tax obligations since they are grappling with a high cost of living and higher taxation, as proposed in the Budget statement, will erode their take-home income. 

The opposition Azimio One Kenya Coalition Party has already said it will mobilise its MPs to vote against the Finance Bill.