In Summary
  • To assert that a wage bill of less than a third of recurrent expenditure and just about a third of total public expenditure as a crisis is preposterous.
  • It is impossible to figure out what the actual take home pay of any job group is from this data. This is deliberate obfuscation.

Two weeks ago, this column took issue with the proclamation that we have a severe wage bill crisis. I demonstrated that the claim was inconsistent with the Budget Policy Statement that is presently before Parliament. To date the Government has maintained a studious silence on this contradiction.

I have since seen a presentation given by the Cabinet Secretary for Planning and Devolution at the wage bill conference organised by the Salaries and Remuneration Commission (SRC).

It states that we are facing a “development crisis” because of a rapidly rising wage bill. The evidence of this is as follows. In the current financial year (2013/14) the wage bill will be 13 per cent of GDP, 51 per cent of revenue, 29 per cent of recurrent budget, and 35 per cent of total public spending.

These numbers, it concludes show that that the wage bill is “taking a disproportionate share of our resources”.

The wage bill cannot be 13 per cent of GDP and 51 per cent of revenue at the same time. Why? If the wage bill was half the revenue, it would mean that revenue is 26 per cent of GDP. But we know that our revenue is just under 24 per cent of GDP.

The presentation shows a stable wage bill at 11 per cent of GDP up to 2011/12 and then jumping to 13 per cent last fiscal year. Two per cent of GDP is not loose change—it is in the order of 70 billion shillings. Either there is a financial scandal of monumental proportions somewhere, or these numbers are cooked.

That is not all. To assert that a wage bill of less than a third of recurrent expenditure and just about a third of total public expenditure as a crisis is preposterous. These ratios are excellent. They cannot possibly be improved on. What are these people smoking?

GAP BETWEEN BOTTOM AND TOP

Why is the Government cooking figures, and so incompetently at that? Why are otherwise intelligent and knowledgeable people making complete fools of themselves? I have a theory that might just make sense of this spectacle.

A decade ago, I was tasked, together with veteran technocrats Harris Mule and Prof Terry Ryan by former Finance Minister David Mwiraria to look into public wage policy. This followed a year of unrelenting industrial unrests that were threatening to cripple the Narc administration.

Kanu had given Narc a hospital pass, in the form of a hefty pay award to teachers. Public university staff, health and local authorities workers had all gone on strike and secured wage increases, as had the police and the military. The core civil service was rumbling.

I have reproduced here two pieces of analyses from the report that we prepared for the minister. The graphic compares the pay of the highest paid Kenyan official with their counterparts in the region.

We calculated that in purchasing power terms, the Kenyan pay was not only way above the other countries in the region; we paid him more than the second senior most international civil servant. And this is excluding allowances, which as we shall see, may have a lot to do with this wage bill scaremongering.

Pay for public officials in Kenya and the region in 1972 and 2003. GRAPHIC: Benjamin Situma / NATION

The table compared the wage dispersion over time and with the comparator countries. The salary structure set by the Ndegwa Commission in 1972 had the highest office earning the equivalent of Sh300,000 in 2003 prices, and the lowest the equivalent of Sh7,900, a multiple of 38 times. Over the next three decades, the basic salary at the top increased two-and-half times in real terms (that is inflation adjusted), while the guy at the bottom lost 25 per cent of the purchasing power.

The gap between the bottom and the top of increased from a multiple of 38 to an incredible 118 times.

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