The Salaries and Remuneration Commission (SRC) is one of the independent Commissions established under Article 230 of the Constitution of Kenya 2010, to bring order and sanity in salary setting.

The Salaries and Remuneration Commission (SRC) is mandated under Article 230 of the Constitution of Kenya 2010 to:

1. Set and regularly review the remuneration and benefits of all State officers; and
2. Advise the national and county governments on the remuneration and benefits of all other public officers.

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.

Public sector wage bill comprises wages and salaries, allowances and other benefits awarded to all public sector employees as compensation for services delivered

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 two commonly employed evaluations of sustainability of a public sector wage bill is its measure compared to the GDP and the national revenue, from which it should be paid.

The benefits of a sustainable public sector wage bill include:

1. A sustainable wage bill is an enabler to achieving the desired expansion in public services and economic development agenda; and,
2. It frees resources to spur investments for a country that desires to promote economic growth.

A high wage bill is fiscally unsustainable as it contributes to:

1. Crowding out resources that could be used for development priorities and enhanced social services;
2. Loss of competitiveness of the economy;
3. Fiscal deficits; and
4. Negative impact on economic growth and employment.

The public sector wage bill in Kenya has been on an upward trend resulting from:

1. Expansion of services to the citizenry to achieve development goals;
2. Push for higher pay by public service employees; and,
3. Low productivity that leads to slow growth of revenue and the general economy.

A high public sector wage bill has several consequences including:

1. It crowds out spending on development and negatively impacts on the government’s ability to render services; 
2. Less resources are allocated to development expenditure, which is generally considered as an important motor of economic growth; and,
3. It leads to severe repercussions on the social services as the government gets constrained to render these social goods.

Several initiatives are in place to manage the public sector wage bill. These are:

1. Job evaluation of all State and public officer jobs;
2. Job grading structures based on the job evaluation results;
3. Salary structures for State officers and public officers;
4. Public sector remuneration and benefits policy;
5. Four-year collective bargaining agreements (CBA); and,
6. Alignment of salary increases to economic realities.

The status of the wage bill is as follows:

1. The total public wage bill to ordinary revenue has averaged approximately 50 per cent in the last ten years;
2. The total wage bill to recurrent expenditure spiked during the 2012/2013 financial year, mainly due to expansion of government following the promulgation of the 2010 Constitution;
3. By the close of the financial year 2018/2019, the wage bill was estimated at Ksh 795 billion. This was 48.1 per cent of the ordinary revenue and 7.9 per cent of the GDP;
4. The international best practice shows that developing countries should spend approximately 7.5 per cent of GDP on wage bill; and,
5. The Public Finance Management Regulations (2015) guides that national and county governments should not spend more than 35 per cent of their total revenue on personnel emoluments.

Yes. The ratio of wage bill to GDP has shown a positive trend in the last five years from 9.6 per cent in 2014/15 to 7.9 per cent in 2018/19.

The best practices for a sustainable wage bill include:

1. Effective performance management linked to measurable outputs aligned to government objectives and citizen’s expectations to improve service delivery;
2. Performance-based pay and incentive systems that are well designed and effectively implemented to improve performance and service delivery;
3. 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;
4. Flexibility to adjust upwards or downwards the size and composition of employment will improve productivity and effectively manage the wage bill;
5. Both the level and skill composition of government employment needs to be consistent with the effective service delivery;
6. 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,
7. 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.

This is twofold:

1. Public Sector labour productivity has great relevance to economic growth because an efficient and effective public sector provides an enabling environment for private sector to thrive; and,
2. High labour productivity in the public sector leads to enhanced private sector investment, which will help grow the economy and increase ordinary revenue.

This has two perspectives:

1. 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,
2. 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.

Salaries and Remuneration Commission
Williamson House, 6th Floor, 4th Ngong Avenue
P.O. Box 43126, GPO-00100
Nairobi, Kenya

Email: info@src.go.ke
Website: https://www.src.go.ke/
Tel: +254 (20) 2710065/81
Tel: +254 794 587 903