Public servants are set for deep wage cuts after June 2022 even as the government looks for ways to reduce the public sector wage bill, as per the demands of the International Monetary Fund (IMF).
In the planned review, allowances could be capped to n40 percent of the gross pay, a change from the current unregulated formula, with some servants receiving up to 259 percent of the wages in allowances.
Among the allowances being targeted include entertainment, responsibility, medical and utility (water, electricity and phone calls).
In the current set up, public sector wage bill consumes almost half of the taxes collected, or close to a third of the total budget allocations.
Also on the chopping board is the daily subsistence allowance popularly know as per diem, which the Salaries and Remuneration Commission (SRC) has been opposed to for some time noe.
“The Salaries and Remuneration Commission (SRC) is currently consolidating comments and feedback from stakeholders. The final allowances and benefits policy will be issued by December 2021. Public sector institutions shall implement the policy in full within six months of issuance of the policy,” said IMF.
IMF recently released the second tranche of Ksh43.86 billion, part of the Ksh258.65 billion that was agreed upon recently. The first disbursement of Ksh33.84 billion was released in April.
“The new program with the IMF will support the next phase of the government’s COVID-19 response. Combining arrangements under the Extended Fund Facility and Extended Credit Facility, it provides for $2.4 billion in low-cost financing over the next three years,” said IMF in a statement.
Kenya’s public sector has at least 247 remunerative and facilitative allowances, up from 31 in 1999. Some of the allowances are catered for in the basic pay. The 247 allowances account for 48 percent of the total wage bill, which has risen to Ksh800 billion from Ksh458 billion in 2013.