6 February 2013

Kenya: Salaries Team Slashes MPs Pay in New Structure

Kenya's fourth president will earn half of what outgoing President Kibaki is taking home, the Salaries and Remuneration Commission has proposed. The next occupant of State House will only earn a maximum of Sh1.7 million and not less than Sh1.3million per month.

President Kibaki currently earns Sh2 million as basic salary and about Sh1.2 million in allowances bringing the total to Sh3.1 million per month.

His successor will take home a a maximum of Sh1.2 million basic salary and a maximum of only Sh500,000 in allowances. The least he or she can earn is Sh900,000 as basic salary and Sh400,000 for allowances.

The proposals also set a limit to the amount that 3,670 high ranking state officers including the deputy president, governors, senators, MPs and county representatives will earn.

Salaries for Cabinet secretaries (ministers), the speakers both for the Senate and National Assembly, the Chief Justice, the Attorney General,the Chief of defence forces (chief of general staff), the secretary to the Cabinet, permanent secretaries, the IEBC chairman, the Inspector General of police, judges, magistrates and kadhis have also been capped in an attempt to reduce the burgeoning wage bill.

All the proposed salaries--inclusive of allowances-- will be taxed in full.This will hopefully bring an end to a repeat of the Tenth Parliament's practice of awarding themselves salary and allowance increments in disregard of public outcry. They also defeated any attempts to tax their allowances.

The MPs were taking home Sh851,000 per month as salary and allowances only paid tax on their Sh200,000 basic salary.This time round, the commission has proposed that the MPs as well as all the state officers whose salary was reviewed, will have to pay tax on the total and not just part of their remuneration.

Members of the 11th Parliament can now expect to take home a maximum of Sh740,927 and a minimum of Sh555,696-- inclusive of all allowances.

The Cabinet Secretaries --a minimum of 14 and a maximum of 21--who will be appointed in the new government can expect to take home about Sh1.1 million which is what each of the 40-plus ministers are currently earning and which the commission has not changed.

Yesterday, the commission appealed to the public to debate the proposals and make their suggestions known so that they can be taken into consideration.

Prime Minister Raila Odinga who is the Cord alliance presidential candidate and his running mate, Vice President Kalonzo Musyoka who both take home Sh2 million in salary and allowances will have to make do with a substantially less income if they are successful.

On January 24, Raila said during an interview with the BBC that he would take a pay cut of upto 50 per cent if he was elected Kenya's next President.

Former Speaker of the National Assembly Kenneth Marende has been earning Sh1.5 million per month. However, his successor and the new Senate Speaker can each expect to earn a maximum of Sh1.4 million and a minimum of Sh1 million.

The commission proposes a huge increase in the salaries of permanent secretaries who currently receive a minimum of Sh213,640 and a maximum of Sh423,280. Under the new proposals, permanent secretaries will be earning a minimum of Sh695,625 and a maximum of Sh927,500.

The Sh1.3 million per month currently being paid to the Chief Justice Willy Mutunga --Sh916,500 as basic salary and Sh400,000 as allowances--will remain unchanged.

However, the Attorney General Githu Muigai who has been earning nearly the same amount as the CJ will take a salary cut. His proposed salary is a minimum of Sh800,000 upto a maximum of Sh1 million.

Salaries for appellate court judges will be doubled in 'an attempt to discourage corruption.' Appellate Court judges will now receive a maximum of Sh920,338 up from Sh576,120 and a minimum of Sh690,253, an increase from the current minimum of Sh312,085.

Releasing the proposals at the KICC yesterday, the commission chairperson Sarah Serem said the salary structure had been arrived at after extensive research in the US, UK, Canada, Australia, South Africa, Tanzania and Rwanda.

She said the structure also captured the more than 450,000 civil servants including doctors, policemen, teachers and, local authorities staff. Currently, the wage bill for the financial year 2012/13 stands at Sh457 billion which is 30 per cent of the Sh1.5 trillion budget.

"Economic aggregates indicate that the current wage bill is already beyond sustainable levels and needs urgent attention to stall and eventually reverse the pattern in the medium term," Serem said.

She said the wage bill to GDP ratio is about 12 per cent which is higher than the internationally desirable level of not more than seven per cent.

Africa's comparative central government wage bill to GDP stands at 6.5 per cent, Asia (5.1), Middle East (7.1), European Union (5.2) while that of Kenya is 7.8 per cent which she described as 'alarming and in need of reversal."

"The analysis is important since wages are paid out of the domestic revenue. The higher the wage bill to revenue, the more vulnerable an economy becomes since less domestic resources becomes available for public investment," Serem explained.

The wage bill to revenue ratio was approaching 50 per cent which is way above the desirable level of not more than 40 per cent. "Our wage bill to recurrent expenditure is above 43 per cent compared to international rate of not more than 40 per cent," she said.

Finance minister Njeru Githae said the Kenyan wage bill was the highest in the continent and had risen from nine per cent in 2011 to the current 12 per cent. He warned this could create a large fiscal deficit in the near future.

"This in turn raises our debt to GDP level to unsustainable path and goes against the principles of public finance enshrined in our constitution," he said.

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