Civil servants are facing huge pay cuts from April next year after the Pay and Remuneration Commission advised to reduce the allowances from 247 to five.
Those working in public service institutions will get only home, commuter, job related, work related and labor market adjustment allowances from 30 April 2022.
However, the wage agency will regularly review the additional allowances taking into account their affordability and financial stability.SRC chairperson Lyn Mengich directed that all state agencies classify all allowances they currently pay into five broad categories.
Institutions are expected to submit the list of its workers receiving allowances to the Commission for review and advice will be out by 30 November 2021 if not so the allowances would be void.
The commission is also paying the allowances as an absolute figure and not as a percentage, saying that percentages are responsible for the country’s always-ballooning wage bill.
“The SRC will set, review and advise on allowances that constitute five categories outlining the purpose, eligibility criteria, criteria rate and scope,” Mengich said.
The agency’s data shows that the wage bill increased to Sh827 billion in the financial year 2019-20, an increase of Sh32 billion in the previous year.
The salary bill of the country’s total revenue in the said year was 49.5 percent, while the salary bill for general revenue during the same period was 51.7 percent.
Payrolls have increased from Sh558 billion in the year 2014-15 to Sh615 billion, Sh664 billion, Sh733 billion and Sh795 billion respectively.
The SRC has also sought a provision that allowances payable to government officials shall not be used for computing pension or gratuity.
The commission revealed that the ratio of allowances to gross pay ranges between 43 and 259 per cent, so there is a lower basic pay or gross pay in public service.
Mengich also said that similar allowances are paid as a percentage of basic pay while others are paid in full, resulting in distortion of remuneration.
In this regard, the policy is being changed to ensure that the ratio of basic pay to gross pay will not be less than 60 per cent – this will be implemented progressively.
“The allowances shall be paid in absolute amount and not as a percentage of basic or gross pay, unless expressly advised by the SRC,” the commission said.
Mengich said they would issue an advisory on the conversion of allowances that are currently paid in full as a percentage of basic pay, “while ensuring continuity in public service.”
Nevertheless, the Commission is of the view that the payment of allowances as applicable today will continue till the issue of final consultations after review.
The commission’s boss said, “The allowances currently being received will continue to be paid until the SRC issues an advisory on allowances to public service institutions.”
He said a compliance check would be conducted in July 2022 to enhance compliance with the policy guidelines, after which the employees of non-compliant entities would lose their salaries.
In the stringent new rules, facilitation allowance paid to public service officers for working outside their duty station will be paid at a uniform rate across the board.
In order to avoid duplication, the allowances paid for similar purposes, but having different names, will be merged and renamed.
“The allowances for which the rationale for payment is still valid, but whose rates are not in line with the intended purpose, will be restructured,” the SRC boss said.
Allowances whose present form remains relevant will be retained, while those whose rationale for payment is redundant or overlaps with basic pay, will be abolished.
“The review will take cognizance of existing collective bargaining agreements, any contractual obligations and existing legal provisions,” Mengich said.
The Pay Commission will determine the allowances to be retained, reconstituted, merged, renamed and abolished.On pensions, the Commission will develop a policy guideline to determine pensionable pay and employer contribution levels in public service.
Allowances shall also not be paid to public servants for purposes which have already been compensated for the relative value of the job or whose purpose overlaps with the basic pay provisions.
“The allowances will not be paid for the purposes which have already been compensated in the basic pay,” the SRC said, calling on the state agencies to streamline the allowances for those already compensated.
Lyn Mengich further warned member of parliament on insisting to pass ttheir proposal bill of their pension in Parliament. She said tht only SRC is mandated to determine the pension rate that every worker is entitled not any person will do it. She further advised them that SRC will look into the matter and provide a suitable way forward.