SRC scorecard: We've saved Sh11 billion in six-year fiscal overhaul

Salaries and Remuneration Commission (SRC) has for the last six years, saved the country Sh11 billion, it has emerged.

In their scorecard report released yesterday, SRC said it also reduced the public wage bill ratio to revenue from 51.54 per cent in the financial year (FY) 2017-2018 to 46.64 per cent in 2022-23.

A 2019 study on Allowances Payable in Public Service, SRC said, helped achieve the results.

“The study identified 247 different allowances paid to public officers, which account for 48 per cent of the total wage bill. SRC developed Allowances Policy Framework for the Public Service, as part of implementing the second Wage Bill Conference Resolution,” said SRC chairperson Lyn Mengich, while releasing the six year’ report.

She added, “In 2021, SRC commenced a phased approach to streamlining the management and administration of allowances. An estimated annual savings of Sh11.2 billion was realised as a result of implementing the Allowances Policy Framework for the Public Service, including from the singular action of abolishing allowances.”

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The report comes at a time the SRC chairperson and her six commissioners’ six-year term comes to an end by September 11, 2024.

According to Mengich, the reduction is projected to further decline to 39.22 per cent in the FY 2023-2024 in a bid to comply with the Public Finance Management Act. The Act requires the wage bill ratio to revenue to be capped at 35 per cent.

The downward trend,  Mengich said, has been achieved despite an increase in the wage bill in absolute amounts, which rose from Sh785 billion in FY 2017-2018 to Sh1.035 trillion in FY 2021-2022. It is projected to grow further to Sh1.7 trillion in the FY 2023-2024.

Mengich said revenue has also grown from Sh1.5 trillion to an expected between Sh1.1 trillion to Sh2.986 trillion in 2024. But if it does not grow at that level, she said the projected Sh1.7 trillion will come down. “This absolute growth in public wage bill is attributed to the increase in the workforce through employment in education, health and security sectors, which are essential services. It is also as a result of upward reviews of remuneration and benefits in response to the cost of living adjustments and the need to attract and retain requisite skills,” said Mengich.

The number of public service employees has been rising from FY 2017-2018 from 842,900 with average monthly gross earnings per employee of Sh62,341 to the current 968,425 and Sh73,540.

Kenya’s wage bill to Gross Domestic Product(GDP) is 7.19 per cent above the 7.5 per cent benchmark target.

Another strategic intervention was enhancing fiscally sustainable salary structures, where she said SRC delivered on fiscally sustainable salary structures, thus allowing the government to allocate more resources to development and other government priorities.

“Cognisant of the high wage bill, the need to harmonise remuneration, economic situation attributed to Covid-19, withdrawal of the Finance Bill 2024, and other austerity financial measures, SRC froze salary structures for over 90 per cent of State corporations, Constitutional Commissions and Independent Offices in the second and third review cycles,” she said.

To cushion public officers against a rise in the cost of living, salary freeze notwithstanding, Mengich said there has been an average three per cent automatic annual increment in the form of notch movement, within the advised salary structures up to the maximum salary points.

Other strategic interventions among the six were rationalised expenditure through SRC advice, especially between FYs 2020/2021 and 2023-2024, where it received requests for advice amounting to Sh 150.89 billion.

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