Ruling scuttles Henry Rotich’s budget
National Treasury Cabinet Secretary Henry Rotich and ministry officials during a hearing by the Public Accounts Committee. The ruling on teachers pay raise puts him in a tight financial corner. FILE PHOTO | DIANA NGILA |
What you need to know:
- Treasury wanted to cut spending on salaries and allocate cash to development.
- Minister will have to source for money to fund the increase.
The Industrial Court’s decision to award teachers a salary increment has dealt a blow to the government’s efforts to tame escalating recurrent expenditure and attain higher economic growth.
Analysts have now warned that this trend may stall economic growth, which is projected at 6.5 per cent this year.
Teachers’ basic salaries will now go up by between 50 and 60 per cent, backdated to July 1, 2013 and this is to be effective immediately, following Tuesday’s court ruling.
Judge Nduma Nderi, however, hoped that the decision would not only end teachers’ persistent strikes but also bring order between the Teachers Service Commission (TSC) and the unions.
Some analysts argue that while teachers have been among the most underpaid public workers in Kenya, the question is where the government will get the funds.
“The fact that they needed an increment was not in doubt. The question, however, is where the government will get funds to finance such a huge increment,” said Bernard Shaw, an economic analyst.
This comes after the government indicated that it was seeking to shift more public resources from recurrent to capital investment to promote strong, sustainable and inclusive growth.
EXTRA BURDEN
Currently, teachers are paid about Sh180 billion annually, feeding into the nearly Sh800 billion recurrent expenditure basket that continues to haunt the government.
While the award may have handed teachers a key win in their fight with the government for a salary increase, taxpayers will bear the extra burden of financing the already ballooning wage bill in the public sector.
Analysts further say increments, especially for public sector workers, ought to be pegged on productivity.
“Wage increments ought to be matched with productivity. By doing this, the workers will be contributing positively to the economy,” said Eric Munywoki, an analyst at Old Mutual Kenya.
National Treasury Cabinet Secretary Henry Rotich, while reading the 2015/16 Budget speech, said the government had made it a priority to shift more resources from recurrent expenditure to development.
