The principles of pay determination are: affordability and sustainability of the Public Sector wage bill, fairness and transparency, attraction and retention of requisite skills, and productivity and performance.
The key components of the wage bill are: salaries, benefits, remunerative allowances, facilitative allowances, pensions and gratuity. The key drivers of the wage bill are: performance and productivity management, wage policies, employee numbers, labour relations, and work ethics.
The best practices for a sustainable wage bill include:
Effective performance management linked to measurable outputs aligned to government objectives and citizen’s expectations to improve service delivery;
Performance-based pay and incentive systems that are well designed and effectively implemented to improve performance and service delivery;
Improved service delivery directly contributes to revenue and economic growth thus positively impacting on wage bill to revenue ratio and wage bill to GDP ratio;
Flexibility to adjust upwards or downwards the size and composition of employment will improve productivity and effectively manage the wage bill;
Both the level and skill composition of government employment needs to be consistent with the effective service delivery;
The African Peer Review Mechanism (APRM) mission in its second report, recommends introduction of an integrated staff appraisal system as a key contributor to addressing the challenge of the high wage bill; and,
The APRM mission further recommends deepening the ongoing public service rationalization both at national and county level, as a key contributor to addressing the challenge of the high wage bill.
The civil service has been running an unfunded pension scheme, which has been increasing over the years. As more employees retire from civil service and life expectancy increases, pension liability continues to rise; and,
The current public pension liability is approximately Ksh 1 trillion. Public Service Superannuation Scheme Act on contributory pension scheme was enacted in 2012, but is yet to be implemented.