IMF Forces SRC to Cap Allowances At 40 Percent of Monthly Salary
Public servants are going to have their gross monthly payments capped at 40 per cent of their gross monthly pay. The directive is set to kick in beginning from July.
The Salaries and Remuneration Commission (SRC) revealed on Thursday that job-related allowances will be abolished. Job-related allowances formed a big part of the gross pay. Other job-related allowances will be merged.
“We shall streamline allowances to gradually get a proportion of basic salary to the gross salary which will be no more than 60 per cent,” revealed the SRC.
“Allowances with redundant rationale for payment and/or overlaps with that of basic salary will be abolished,” added the SRC.
The Government of the Republic of Kenya struck a deal with the International Monetary Fund (IMF), getting a Sh. 261 billion loan with part of the terms of the deal being reducing the public sector wage bill so as to free up more funds for development projects.
The IMF’s instruction seems to have taken shape with the government via SRC working to reduce the public sector wage bill which in the year leading to June were at Sh. 827 billion. Allowances represented 48 per cent of the sum.
The number of allowances for public servants rose by 696 per cent i.e. 247 when compared to the 31 in 1999.
The treasury has been on a difficult mission to increase revenues to be able to run the increasingly bloated public wage bill which takes more than half of the taxes.
Among the allowances that will be abolished includes those the SRC views as already catered for in the worker’s basic pay. These comprise of entertainment allowance, medical allowance and utility allowance that caters for water, airtime, electricity and security bills.
The SRC has notified all State agencies and ministries that they have until the 30th of November to submit a list of the allowances that are currently being paid to their staff. This will pave the way for a review that will harmonize the allowances.
The reduction process will see the removal and/or merging of allowances that will lead to the government saving Sh100 billion yearly from the public service wage bill.
All civil servants also saw the government freeze a Sh. 82 billion salary raise for two years. Kenya now seems to be experiencing a dire cash flow situation due to stagnating revenues and the ever-increasing debts obligations such as the IMF loan.
The freezing is meant to control the recruitment, removal of ghost workers including dead staff, those retired and those who have deserted duty.
According to the Kenya Institute for Public Policy Research and Analysis (KIPPRA), there has been an increasing belief that the government has become the preferred employer and this needs to change.