The government has frozen any salary increment for public servants for the next two years in what Salaries and Remuneration Commission (SRC) says is meant to tame the runaway wage bill and ease fiscal pressures.
The decision is expected to affect teachers and elected officials who have in the past been clamoring for a pay hikes amid strained exchequer resources.
For the last six years the government has been battling a stubborn high public wage bill that has increased from Kshs. 526 billion in 2013/2014 to Kshs. 827 billion in the current financial year.
Public wage bill has worsened over the last five years as most counties embarked on a hiring spree to complement their existing workforce.
SRC Chairperson Lynn Mengich says the decision was based on the economic slowdown following outbreak of COVID-19 pandemic coupled with efforts to manage the ballooning wage bill.
“Public sector institutions will be required to fully implement the allowances and benefits policy…SRC will review the situation after two fiscal years and based on the status of the economy,” said Mengich.
According to the SRC in the 2019/2020 financial year, the wage bill increased by Kshs. 32 billion compared to Kshs. 795 billion in the 2018/2019 financial year.
The National Treasury is under pressure form Bretton Woods institutions to rationalize the public wage bill.
A fiscal consolidation strategy from the National Treasury to the International Monetary Fund indicates that the government will freeze hiring and pay hikes to reduce wage bill to 5.4% of GDP in FY2020/21 to about 3% by FY2022/23.
The SRC however says ongoing pay talks in various institutions will proceed as planned.
“No additional funding will be provided for implementation of the job evaluation results in the FY 2021/22 and FY2022/2023. Public sector institutions may implement job evaluation results by placing jobs in their rightful job evaluation grading within the existing salary structure and approved budgets subject to confirmation to SRC that the funding is provided for in the current budget,” said Mengich.
Mengich says the pay hike freeze is expected to tame the unsustainable wage bill as the government redirects the thin resources to strategic priorities areas that will jump start the covid ravaged economy.
SRC says based on the performance of the economy, the National Treasury will advice the commission when the review can be done.