Teachers and other civil servants will not receive any new salaries any time soon, the Salaries and Remuneration Commission (SRC) has declared.

According to the latest circular by SRC, no new Collective Bargaining Agreements (CBAs) will be signed in the next two years as a result of the bloated wage bill and effects of the Covid 19 pandemic on the economy.

Reads the full contents of the SRC circular below;

Outcome of the Third Public Sector Remuneration and Benefits Review Cycle; 2021/2022-2024/2025
The Salaries and Remuneration Commission (SRC) is established under Article 230 of the Constitution of Kenya, 2010, with the mandate to set and regularly review the remuneration and benefits of State officers, and to advise on the remuneration and benefits of all other public officers.

As per Section 11(e) of the SRC Act, 2011, the Commission set a four-year review cycle for remuneration and benefits in the public sector. The first review cycle ran for the period 2013/14–2016/17, and the second review cycle was during the years 2017/18–2020/21.

The third review cycle is for the period 2021/22–2024/25, and will commence in the financial year 2021/2022.

The Remuneration Review Cycle under reference is undertaken within the following context;

a) Economic outlook
The outbreak of the Covid-19 pandemic and the resultant containment measures has and continues to impact the global economy. The World Economic Outlook, January 2021, as published by the International Monetary Fund, estimates that the global economy slowed down by 3.5 per cent in 2020, from a growth rate of 2.8 per cent in 2019.

The current economic slowdown is worse than the slowdown reported in the 2008–2009 global financial crisis. Prior to the outbreak of the pandemic, Kenya’s economy was resilient in spite of the challenging global environment. The economic growth for 2018 and 2019 averaged 5.4 per cent.

In 2020, the economy was adversely affected by the outbreak of the pandemic, which affected lives and livelihoods and, to a greater extent, businesses and economic activities.

As a result, the economy is estimated to have slowed down to around 0.6 per cent in the year 2020, from a growth of 5.4 per cent in 2019.

Kenya’s economy is projected to recover and grow to around 6.6 per cent in 2021, supported by ongoing investments in strategic priorities of the government under the Big Four Agenda, and implementation of the economic recovery strategy.

b) Impact of Covid-19 on jobs and income
Due to Covid-19 restrictions globally, the International Labour Organization estimates that 8.8 per cent of global working hours were lost in 2020 relative to 2019.

This is equivalent to 255 million Full-Time Equivalent jobs, which were about four times greater than during the 2009 global financial crisis. Workers globally, including in Kenya, have had to accept shorter working hours and wage cuts in different sectors and industries. Several countries have taken measures to rearrange their expenditures to share the economic burden.

The measures undertaken globally include, but not limited to:

  • introducing basic salary cuts;
  • withholding annual increment, freezing of minimum wage;
  • freezing inflation-linked increases in basic salary and pension;
  • suspending all planned salary increases effective financial year 2020/2021; and
  • mandatory donations of portions of some employees’ salaries to finance the pandemic response.

In Kenya, in the spirit of social dialogue, Kenya’s social partners entered into a Memorandum of Understanding detailing a joint approach to managing labour relations during the period.

Review of remuneration and benefits in the Third Remuneration Review Cycle While setting and advising on remuneration and benefits payable, SRC is guided by constitutional principles set out in Article 230(5) of the constitution and Section 12 of SRC Act, 2011.

These principles are:

  • Affordability and fiscally sustainability;
  • Attraction and retention of requisite skills;
  • Recognition of performance and productivity;
  • Transparency and fairness; and
  • Equal remuneration to persons for work of equal value (Equity).

The Commission has reviewed remuneration and benefits in the context of these principles as follows;

Affordability and fiscal sustainability of the wage bill

The current Public Sector Wage bill consumes a larger percentage of revenue than the target set in the Public Finance Management Act 2012 and a larger percentage of GDP compared to average for developing countries.

Affordability and sustainability ratios

S/N Item Description 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 Target
1 Total wage bill (KSh Billion) 615 664 733 795 827
2 Wage bill to ordinary revenue 53.3 50.8 53.5 48.1 51.7 35%
3 Wage bill to GDP 9.2 8.7 8.3 7.9 8.3 7.50%

To jumpstart the Covid-19-ravaged economy, more resources must be made available for investment in the government priority areas. To release resources for investment in the priority areas, the wage bill to revenue and to GDP ratios must take a trajectory towards achievement of the target ratios

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