President Uhuru Kenyatta based his rejection of the teachers’ 50-60 per cent pay increase because it would have serious economic consequences.
The Sunday Nation has seen a confidential document prepared by the Treasury and tabled before the President on arrival from Milan, Italy.
Treasury has repeated the same line even as the strike enters week three tomorrow, but the document now shows the basis of fears that the increase would create demand for more pay from civil servants and the security agencies.
The Treasury has received a letter from the Public Service Commission recommending that if the teachers’ award is implemented, then civil servants must be immediately looked after.
The paper by Treasury Cabinet Secretary Henry Rotich warns the pay increase would strain the government budget and deny the economy the resources for infrastructure and social services like health and education.
The report adds: “The wage bill will rise from the current Sh568 billion to an estimated Sh902 billion by 2016/17,” states the document.
“In terms of Gross Domestic Product, the ratio of wage bill will rise to 12 per cent against an average of 6.5 per cent for sub-Saharan Africa and about 5 per cent for the East Asian Tigers,” the document says.
Similarly, the proportion of recurrent budget to total budget will increase from the current 69 per cent to 75 per cent, leaving development budget at 25 per cent. This is inconsistent with public financial management.
The proportion of salary to ordinary revenue will increase from the current 34 per cent to about 40 per cent. The trend in most countries is to keep salaries at below 35 per cent.
With these facts the President told teachers, “You can’t kill tomorrow because of what you want today. Money is created over time and the law won’t allow us to borrow for salaries”.