Kenyan Public Servants have been told their allowances will be capped at 40 per cent of their gross monthly pay from July next year as the current system is too generous and unsustainable.
The Salaries and Remuneration Commission (SRC) said it would also abolish some job-related allowances and merge others in an attempt to lower the public sector wage bill and free up more funds for development projects.
In a statement, the SRC said there would be a streamlining of allowances to progressively achieve a proportion of basic salary to the gross salary that was no less than 60 per cent.
“Allowances whose rationale for payment is redundant and or overlaps with that of the basic salary shall be abolished,” the SRC said.
Currently some Public Servants take home more than twice their monthly basic play in allowances.
The move is part of a deal with the International Monetary Fund (IMF) to free up more funds for development projects.
The IMF directed Kenya to lower the public sector wage bill as part of conditions tied to a Sh261 billion ($A3.2 billion) loan agreement with the country early this year.
The public sector wage bill stood at Sh827 billion ($A10.1 billion) in the year to June, with allowances accounting for 48 per cent of the expenditure.
Allowances targeted for abolition include the medical allowance, entertainment allowance and utility allowance, which covers water, electricity, airtime, and security bills.
In June, the SRC froze a Sh82 billion ($A1 billion) salary increase for all Public Servants for two years, highlighting Kenya’s rapidly deteriorating cash-flow situation that is marked by near-stagnant revenues and worsening debt service obligations.
It also said it would curb fresh hiring, and work on removing ghost workers, including staff who had died, retired or deserted duty, but still drew a salary.
Nairobi, 10 October 2021
