Author: Stephen Oinga

Kenya’s public wage bill stands at a crossroads of fiscal management and economic development. In any country, a fiscally sustainable public wage bill holds promise for expanded service delivery and economic advancement.

For Kenya, according to experts, budget allocations for development have constantly been strained by the wage bill that has been growing at a snail’s pace. John K. Monyoncho, Commissioner, SRC, points to progress.

In his paper presented during the Third NWBC, Monyoncho elucidated that the wage bill to ordinary revenue ratio has improved, declining from 54.77 per cent in 2020/2021 to 47.06 per cent in 2021/2022, and projected to reach 46.64 per cent by 2022/2023.

This improvement, according to Monyoncho, is driven by enhanced labour productivity, prudent workforce management, and tighter controls on expenditures.

Yet, Kenya’s global labour productivity ranking at 155 out of 189 by the International Labour Organisation (ILO), 2023, strongly indicates the need for further improvement.

As illustrated in Monyoncho’s paper, projections for 2028/2029 envisage a workforce expansion to 1.054 million and a wage bill increase to Ksh 1.428 trillion. The revenue is expected to grow to Ksh 4.128 trillion, fostering a more promising wage bill-to-revenue ratio of 35 per cent, as envisioned.

Lastly, realising this ultimate mission demands concerted efforts and strategic interventions, according to Monyoncho. He outlined a roadmap to emphasise strengthening responsiveness to the private sector, maximising revenue from State corporations, optimising operational efficiency, solidifying accountability mechanisms, and enhancing public service delivery, among some key success factors.

Further, he underlined the fiscally sustainable remuneration frameworks, overseen by the SRC, and organisational optimisation as crucial pillars of productive and sustainable public service.

“A fiscally sustainable public service wage is key to attaining economic development. It frees resources for economic growth,” said Felix Koskei, Chief of Staff and Head of Public Service.

“A high wage bill crowds out resources, leading to a high fiscal deficit and unsustainable growth,” he said during the Third NWBC.

Kenya faces various challenges, both internal and external, including international conflicts, climate change and rapid technological advancements, all of which impact economic growth.

Despite the economy growing at a rate of 4.8 per cent in 2022, the number of public officers in the country increased from 865,000 in 2019 to 963,000 in 2023, Koskei said, highlighting the unsustainability of this growth and the government’s commitment to achieving a balance between fiscal responsibility and service delivery.

During 2022/2023, Kenya collected about Ksh 2.38 trillion in revenue, with about 7.66 billion dollars spent on the wage bill, according to the National Treasury.

To address this issue, Hon. Koskei announced the government’s plan to adopt innovative practices such as business process outsourcing and the use of digital technology to deliver services and manage human resources more efficiently.

He urged employers, employees and trade unions to be cognisant of the state of the economy, further noting that it was not possible to secure additional salaries. He noted that Kenyans were already paying high taxes who also prefer that their taxes first went to fund projects and initiatives that would turn the economy around.

In the majestic, splendid halls of Bomas of Kenya, Nairobi, a convergence of great minds and hearts from across borders marked the Third National Wage Bill Conference (NWBC) from 15 to 17 April 2024, to address the country’s public wage bill challenges. Led by Lyn Mengich, Chairperson of the Salaries and Remuneration Commission (SRC), the gathering illuminated Kenya’s path towards fiscal prosperity.

Mengich highlighted the progress since the last conference in 2019, noting key achievements such as the operationalisation of the Framework for Recognising Productivity and Performance in the Public Service, launched in April 2023.

SRC also developed a framework for productivity measurement, piloted by 24 State corporations, including KenGen, Kenya Bureau of Standards, and the Ministry of Health. Over 8,000 public officers across 400 institutions have been trained on productivity.

She added that the Public Sector Remuneration and Benefits Policy, launched in 2021, and the ongoing implementation of the Framework for Streamlining Allowances have contributed to a positive trend in the wage bill-to-revenue ratio.

Mengich reported that the implementation of the NWBC 2019 resolutions, alongside other SRC initiatives, contributed to the positive trend in the wage bill to revenue ratio, which has come down from 51.4 per cent in 2018/2019 to 47.06 per cent in 2021/2022, with further projection to 46.64 per cent in 2022/2023.

Key SRC initiatives over the past three years have resulted in significant cost savings, she noted. For instance, SRC approved Ksh 12 billion out of Ksh 98 billion requested, thus, preserving Ksh 86 billion in the economy.

Additionally, the first two phases of streamlining allowances saved the nation a whopping Ksh 17.3 billion over four years.

Looking forward, Mengich emphasised the goal of achieving a 35 per cent wage bill-to-revenue ratio by 2028, as per a resolution from the National and County Governments Coordinating Summit held in December 2023.

To support this, a Steering Committee, including SRC, the Public Service Commission, the Intergovernmental Relations Technical Committee, and the Ministry of Public Service, was established to spearhead, convene, and ensure the success of the Third NWBC.

Mengich called for collective action through multisectoral cooperation to ensure fiscal sustainability and improved productivity, highlighting the need for public institutions to develop strategies to meet the set-out target of 35 per cent ratio.

“Let us ensure future generations inherit a self-sustaining country,” she concluded.

By Anthony Mwangi, Safi Godana and Stephen Oinga

The Third National Wage Bill Conference (NWBC), held from 15 to 17 April 2024, at the Bomas of Kenya, unveiled a robust plan aimed at managing the public wage bill. The NWBC resolutions emphasised on the government’s commitment to achieving a wage-bill-to-revenue ratio of not more than 35 per cent by 2028.

The conference drew a distinguished assembly of hundreds of delegates comprising national and county government leaders, private sector representatives, civil society organizations, among other institutions.

Of primary importance was the impressive turnout of high-profile leaders, led by H.E. the President Dr. William Ruto. Others included, Hon. Rigathi Gachagua, Deputy President; Hon. Musalia Mudavadi, Prime Cabinet Secretary; Anne Waiguru, Chairperson, Council of Governors; among several other county governors and leadership in public institutions.

Lyn Mengich, Chairperson, SRC, noted that the presence of such high-level delegates signed the government’s dedication and commitment to tackling the pressing issue of the public wage bill.

The three-day conference, which was organised by a Steering Committee comprising; Lyn Mengich, Chairperson, SRC; Hon. Mutahi Kahiga, Governor, Nyeri County and the Chairperson, Human Resource, Labour and Social Welfare, Council of Governors (COG); CPA. Kithinji Kiragu, Chairperson, Inter-Governmental Relations Technical Committee.

Other Steering Committee members include; Amos N. Gathecha, Principal Secretary, State Department for Public Service; Veronica M. Nduva, Principal Secretary, State Department for Performance and Delivery; Philip Mongóny, Chairperson, State Corporations Advisory Committee; and Amb. Anthony Muchiri, Chairperson, Public Service Commission.

The delegates were tasked to carry the torch and implement the resolutions towards attaining the 35 per cent target. Several high-level presentations and remarks were delivered by subject matter experts during the plenary and caucus sessions.

The target will be achieved within a framework of a whole-of-government and multi-disciplinary approach. In his address, President Ruto called on the conference delegates to implement the resolutions.

The conference, which was beamed Live for three days on social media to allow thousands more to tune in, was also covered prominently by a large battery of mainstream and digital media. KBC covered the conference LIVE. The wage bill conference was the hot topic of the town during that week.

The broad objective of the conference was to engage stakeholders in discussions and recommendations towards achieving the Public Finance Management Act, 2012, and Regulations, 2015, threshold of 35 per cent wage-bill-to-revenue ratio, at both the national and county government levels.

The specific objectives, which were realised at the conference, were; to identify strategies that facilitate the national and county governments to achieve the ideal wage bill to revenue ratio of 35 per cent by 2028; and explore the role of productivity mainstreaming in improving the wage bill to revenue ratio.

Other objectives include, to; evaluate the role of technology and innovation in payroll management and service delivery; assess the divergence between approved staff establishment versus optimal levels for efficiency in public service and wage bill sustainability; and; share experiences from the private sector and other jurisdictions and draw lessons in productivity improvement in the public service.