Kenya Aims to Reduce Public Wage Bill to 35 Percent, SRC Outlines Strategy

NAIROBI – The Salaries and Remuneration Commission (SRC) is set to host the 3rd National Wage Bill Conference next month, focusing on actionable strategies to reduce the public service wage bill to 35 percent of revenue by 2028. This target aligns with the Public Finance Management (PFM) Act of 2012, and follows a commitment made during a summit between National and County governments three months ago.

According to Kenya News Agency, who spoke at a media briefing, Kenya’s labor productivity stands below par internationally, with the country ranked 151st globally and 22nd in Africa according to 2021 data from the International Labour Organization (ILO). Mengich highlighted the growth of Kenya’s public service wage bill to approximately one trillion shillings in 2022, but noted a positive trend in the wage bill as a percentage of revenue, thanks to SRC’s efforts and stakeholder collaborations.

The upcoming conference aims to forge a pathway towards economic development and improved public service delivery, emphasizing the enhancement of productivity for fiscal sustainability. SRC Commissioner John Monyoncho provided an overview of the wage bill’s trajectory, noting a decrease from 54.77 percent of ordinary revenue in FY 2020/2021 to an estimated 40.45 percent by FY 2023/2024. He identified key factors driving the wage bill, including low labor productivity and the growth in public service employment.

To achieve the 35 percent target, the government has initiated measures such as job evaluations, freezes on salary structures for State Corporations and public officers, and harmonization of salary scales. These steps are part of a broader strategy to enhance labor productivity, manage wage growth, control employment numbers, and leverage technology in payroll and service delivery.

Mutahi Kahiga, Council of Governors Chair for Human Resource, Labor and Social Welfare, noted the rising county government wage bills, particularly in health and education. He stressed that a high public wage bill could compromise non-wage expenditures crucial for long-term growth and development, also affecting pension liabilities. Kahiga advocated for a public service remuneration framework that is sustainable, competitive, and transparent, underlining the importance of linking pay to productivity and performance.

The conference, scheduled for April 15-17, will serve as a critical platform for deliberating on the nexus between public wage management and national fiscal health, under the theme “Fiscal sustainability of the public wage bill through productivity.”