Cabinet decision to freeze public employment shows the SRC is failing

Wednesday November 27 2013

By KWAME OWINO
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Early this week, the executive branch of government communicated a Cabinet decision that suspended recruitment in the public sector to bring the wage bill under control. All factors considered, this was a commendable decision.

However, it also implies that the Salaries and Remuneration Commission (SRC), whose major purpose is to ensure that the country has a manageable wage bill, may be failing in this task.

Even taking the advice of the SRC into account, it is clear to the executive branch of government that freezing employment in the public sector is necessary to ensure sound fiscal balance in the country’s finances.

That this decision has been made early in the life of the Kenyatta Administration is a sign that this administration is keen to read acute signs. It also means that the SRC should make haste with its new wage policy for the country, to ensure that it does not shut the gate after the horse of runaway wages has bolted.

Blame aside, the cabinet decision requires further strengthening by reviewing the primary drivers of wage growth in Kenya.

It is clear that a freeze on employment in the public sector is necessary, but that alone will not meaningfully constrain wage growth. The reason for this is that the allowances structure in Kenya’s public sector is too flexible and self-determined by state departments; hence allowances could still be utilized to compensate for any freeze in remuneration of workers retained in the public sector.

Again, this is an area in which the SRC has woefully been behind, instead engaging in numerous negotiations and hiring of consultancy firms to consider issues that require quick decisions and enforcement of principles.

Unless the executive branch of government goes ahead to develop policy on travel and allowances, it is clear that the wage problem will transform itself into an allowances problem, as demonstrated by the unbelievable sums paid to the officers serving in the Judicial Service Commission.

UNDEVELOPED PENSIONS

Added to the question of the allowances system is the factor of the underdeveloped public sector pensions system. Because the current pensions mechanism in the public sector has not been fully converted into a contributory system, many employees will retire without dedicated savings for their pension.

Subsequently, retirement benefits for pensions of these and other workers will be met entirely from revenues as part of the Consolidated Fund Services of the annual budget.

One result of payment of pensions from annual revenues is limited budget flexibility as these obligations of the public sector have priority over other expenditure.

Delays in establishment of the public sector pensions fund with contributions from employees of all three arms of government mean that taxpayers will continue to bear the unjust burden of pensions for workers who have not made any contribution for their pensions.

Another issue that contributes to the growth of wages in the public sector is the strength of unions demonstrated by the ability to ensure increments in both wages and the expansion of employment numbers especially for teachers in Kenya.

Granted that the Constitution has established a right for employees to form unions, their demand for wages is sometimes oblivious of the affordability of desired wages.

That medical and teaching services are so critical almost always ensures that calls by the largest unions to the withdrawal of labour inevitably result in concessions on wages irrespective of the state of public finances. This is an area that the Salaries and Remuneration Commission (SRC) should consider a priority.

INTERMINABLE NEGOTIATION

It is desirable for all branches of the government to ensure that the total compensation paid out to workers enables that individual earners live decently. The difficult point however is for the communication to be made clear that increased revenues in the public sector should not automatically translate into wage increments.

The lesson here for the SRC and other constitutional commissions is that in their quest towards self-preservation and the sensitivity to demands from bodies that they are expected to have administrative power over, they undermine their core functions and end up as ineffective institutions. The natural result is that the main branches of government such as the executive will initiate unilateral actions that illustrate their ineffectiveness.

Similar to other constitutional commissions, the SRC can only preserve its public profile by responding clearly to real challenges, and that requires avoiding interminable negotiation with intransigent branches or departments of government in this matter.

Only then does constitutional authority for commissions have meaning.