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Bloated wage bill bad for economy, says Mudavadi

Prime Cabinet Secretary Musalia Mudavadi

The time and opportunity to address the imbalance between the public wage bill and the revenue the country collects is now.

Prime Cabinet Secretary Musalia Mudavadi has said collectively, urgent and concerted efforts must be taken for a lasting solution to be found.

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He said the blotted wage bill is part of what has resulted to more public debt and more taxes.

“We must foster constructive and meaningful dialogue and forge a way forward that will propel us into fiscal resilience as a nation.” he said.

Speaking at the 3rd edition of the wage bill conference that came to an end at the Bomas of Kenya, Wednesday, Mudavadi also the Cabinet Secretary for Foreign and Diaspora Affairs said the challenge of a blotted wage bill squeezes governments’ operations largely affecting service delivery to the citizens.

He said the inability to effectively fund development programs as a result of the rising public wage bill challenge impedes the realization of key programs that could be a game changer to the lives of many Kenyans.

“Fiscal sustainability is an important stimulus for economic prosperity and social transformation. However, the current imbalance between the public wage bill and revenue, breaches the cardinal principle of prudent economic management.” he regretted.

Adding that “As a country we are experiencing a situation where the ratio of our wage bill to revenue has fluctuated over time but remains considerably high. While the ratio improved from 51.54pc in 2017/2018 to 47.06pc in 2021/22 and 46.64 in 2022/2023, it is still significantly higher than the cap of 35pc stipulated in the Public Finance Management Act, 2012 and the attendant Regulations of 2015.”

Mudavadi said the denominator in addressing the imbalance should focus on productivity side where as a nation there is need to ensure the cake becomes bigger by day, challenging public servants to in-calculate the culture of result-oriented performance and prudent management of public resources.

He said this will help take the country to the next level of economic empowerment.

“Together we have the expertise, experience and collective wisdom to chart a path towards achieving the desired ratio of wage bill to revenue. It is imperative that we acknowledge the multifaceted nature of the challenges we face since the rising wage bill not only strains public finances but also hampers the ability to realize the much- anticipated Bottom-Up Economic Transformation Agenda for the nation.” said Mudavadi.

Mudavadi said there is a critical element that the government is working on to ensure it employs the right people to do the right job where competitiveness, efficiency, professionalism and aspects of cultural change will become a parameter to measure cost visa vis results.

Mudavadi pointed out on the lagging issue that should be looked into in terms of determining what is the real and what is the living wage bill at the backdrop of the biting inflation.

“This conference on the wage bill being held at the famous Bomas of Kenya should provide a ground where we collectively reflect on the bitter and sour but where ultimately the end will be sweet. Tough decisions will have to be made because the status of the economy that was inherited from the previous regime was devastating.” he said.

He said as a nation this time round it has to be done the right way with a targeted and deliverable approach.

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