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Government expenditure on civil servants’ bonuses and salaries reaches sh4.2 billion amid calls for better compensation

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Salaries and Remuneration Commission(SRC) Chairperson Lyn Mengich at the commission's offices in Nairobi on July 1, 2023, during a press briefing.
Salaries and Remuneration Commission(SRC) Chairperson Lyn Mengich at the commission's offices in Nairobi on July 1, 2023, during a press briefing

Government spending on civil servants’ bonuses, salary increases, and Collective Bargaining Agreements (CBAs) reached a substantial sum of Sh4.27 billion in the fiscal year ending in June. This surge in expenditure occurred as government employees increasingly demanded improved compensation. The Salaries and Remuneration Commission (SRC) disclosed that they greenlit requests for salary hikes, bonuses, and allowances, significantly inflating the overall wage bill. This exceeded the Sh2.5 billion increase observed in the previous fiscal year and put additional strain on the government’s finances, especially as it pursued a fiscal consolidation policy.

An examination of the data reveals that bonuses and rewards made up the largest portion at Sh1.43 billion (34 percent), primarily disbursed in the last three months of the previous administration. This was followed by salary reviews at Sh1.29 billion and allowances and benefits at Sh1.2 billion.

SRC stated, “The total value of advice for the financial year 2022/2023 amounted to Sh4.27 billion, representing 52.26 percent of the value of requests received.” Furthermore, requests from workers during the recently concluded fiscal year totaled Sh8.17 billion, as employees sought higher wages due to rising inflation.

This significant increase in income coincided with the introduction of a new public service reward system for high-performing civil servants. The Public Service Commission (PSC) launched this scheme two years ago, providing cash rewards to government workers, including teachers, doctors, and nurses, who achieved annual targets set by performance contracting committees. These cash rewards were granted in addition to their regular salaries and allowances.

The Performance Management Regulations of 2021 paved the way for the creation of this awards scheme, which aimed to recognize employees who demonstrated ethical practices and introduced innovations leading to improved public service delivery.

Civil servants have been advocating for salary increases due to the rising cost of living, which has significantly reduced their purchasing power. Inflation, a measure of the cost of living, has remained above seven percent since last year, intensifying the demand from the 954,900 civil servants for higher compensation.

However, these calls have posed challenges to the government’s efforts to control the growth of the public wage bill, which now consumes more than half of the total revenue, hindering investments in development projects. The Treasury has struggled to manage the bloated public wage bill, especially in light of mounting funding commitments.

The government faces resource constraints as it seeks to finance essential projects, given the challenging economic conditions that have impacted revenue collection and increased foreign debt servicing obligations. The public wage bill was projected to reach Sh1.1 trillion in the fiscal year ending in June, and SRC anticipates it will further rise to Sh1.17 trillion in the current financial year.