Kenya’s soaring wage bill and how to tame it – Part 1
We loved it, praised and celebrated it almost to the man. According to many, it is one of the greatest milestones since Kenya started her long walk to freedom back in time. I’m talking about the Kenya’s Constitution promulgated in August 2010. And I agree, the freedom enshrined in the constitution has been taunted as one of the most progressive in modern society. However, if the stone that the builders rejected became the corner stone in the bible, then the new constitution is the stone that they accepted; the stone that created cracks in the new temple.
The new constitution is a threat to the nations stability as it has created offices everywhere, offices that need money – big money. We have an expanded Parliament. The new constitution created the Senate arm of Parliament and enabled the National Assembly to increase by more than half from 222 seats to 349 seats thanks to the creation of new constituencies for political expediency and creation of county women representatives to water down the gender equality debate.
Then there are the commissions that have overlapping and duplicate roles. For example the Parliamentary Service Commission, Teachers Service Commission, Judicial Service Commission and Public Service Commission generally do the same thing for different types of employees of the same Government. These commissions, although independent, seem not have the ability to fairly and justly determine the salaries of their respective employees in line with the economic realities so the Salaries and Remuneration Commission was created to help them do that minor work. The Commission of Revenue Allocation and The Controller of National Budget can also do the work of the other. And of course we needed the constitution to be implemented. In this regard Parliament created a committee in charge of implementing the constitution but the constitution also decided to have a commission to do the same work in the name of the well paid Commission for the Implementation of the Constitution.
The Constitution is not yet done. To address inequality and equity issues in resource distribution, the constitution brought to us the devolved government structure thereby creating 47 Governors and their 47 deputies. One would say that the Governors have simply taken over the positions left vacant by the Mayors, but no, the salary demanded by the Governors and the fact that there are County Assembly Speakers water down such an argument. The members of County Assemblies also want to be paid and paid well.
To add salt to injury, it seems that all the ills of public expenditure delving the central government has simply been devolved. Although the National Government has trimmed down the Cabinet, we know there are offices that have been created that the country does not need. Here we are talking about offices such as Political Adviser to the President and the office of Digital Media and Diaspora whose functions can be carried out by the Ministries of ICT and Foreign Affairs respectively. Similarly, by creating 47 counties we have ended up with as much as 3 officers per office in the counties having the same mandate, creating bloated National and County Governments. Before I forget, we need to quantify the budget allocation to festivities, luxurious vehicles, and turning 5 star hotels into residential homes by some counties.
Stories aside, these offices have managed to get the wage bill rise from Shs 241 billion in 2008/2009 to Shs 458 billion in 2012/2013 which is 90% increase on the previous wage bill. The new Shs 458 billion wage bill is more than 50% of Domestic Revenue,15% over and above the accepted upper limit of 35% for Sub-Saharan Africa countries, other recurrent expenditure excluded.
The current state of government expenditure is a sure pointer that our vision 2030 may be a pipe dream. We have no resources to fund critical flagship projects as most monies go to offset the costs of recurrent expenditure. So when the government is talking about freezing pay rise, implementing pay cuts and retrenchment in the civil service you can understand.
But for those of us who have lived long enough can remember the word retrenchment with jitters. It is not easy to forget the dramatic results the Government action had on several families who had to go through it. So when the Government starts taking about retrenching persons from the civil service, fear and anxiety must be running through the minds of those who are likely to be caught in between. As much as the civil servants who are likely to be affected are complaining, it is evident the retrenchment is becoming inevitable.
In the meantime the government has tried to leverage on the wage bill by implementing taxation. The levies on bank and mobile money transactions and the VAT on hitherto exempted commodities are examples. However, the VAT is likely to worsen the economic situation. Consider an example of mobile phones. Without VAT, very many Kenyans were buying mobile phones making Kenya one of the most penetrated market by mobile devices. As the number of people with mobile phones increased, their expenditure on voice, text and data also increased a million fold. Leniently taxing the telephony services gave the government more than 10% of national revenue.
But now the government has decided to tax electronics means fewer and fewer Kenyans are buying the communication gadgets which will lead to decreased use of telephony services. The same argument applies to any tool. If farmers are able to purchase farming machinery and equipment cost effectively, they will be able to increase their output hence ensuring food security.
How then should the government tame the soaring wage bill? Read Kenya’s soaring wage bill and how to tame it – Part 2.
Benard Oloo who is guest Author with Kachwanya.com has contributed immensely to this article.