Manage public sector spending on salaries

Whereas it is encouraging that civil servants will benefit from a pay increase this month, there is also need to ensure that pay and perks do not gobble more than the set limit of tax revenue.

The government has been selling the message that it will be living within its means, an argument that it has used to make a case for a slowdown borrowing, which ironically has led to delays in payment of civil servant salaries.

Kenya’s wage bill, by the government’s own estimates, has been growing by about 5.7 per cent year on year. This means that as an employer, the government has set the pace for workers’ pay. From a civil servants’ point of view, this comes as good news because it means their pay is growing. However, there are many cadres of the civil servants, including teachers and tutors in technical colleges, who have not benefited from the pay reviews.

From a taxpayers’ point of view, increased spending on salaries automatically translates to a reduction in development expenditure. Given that Kenya is already spending over 60 per cent of its tax revenue on debt repayment, this means there is too little left for projects that benefit the public.

Indeed, government officials are on record saying they intend to reduce capital expenditure on mega projects as part of the government’s strategy to reduce indebtedness and the fiscal pressure that the administration is facing and which is partly to blame for delayed public sector salaries.

And this raises two issues that policy makers and Treasury officials need to address going forward. The first is ensuring that public sector wages are sustainable and that they are remitted on time. It is important for the government to set a good example so that private sector players do not fall into the trap of delaying workers’ pay just because the government is making the same mistake.

The second issue they must address is striking a balance between recurrent and development expenditure so that sustaining government operations does not because the main preoccupation of those in power. Governments ought to be sustained to offer services to the people, not just to exist as an end in itself.
So, even as the Salaries and Remuneration Commission considers the due review of pay for civil servants, it must act in a way that balances between the interest of workers and taxpayers

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