The Government has turned its wrath to civil service retirees as the state moves to contain spiraling wage bill and patch up its wobbling financial status.
Treasury Cabinet Secretary Henry Rotich
With recurrent spending surpassing the statutory requirement of 70 per cent of the budget, National Treasury has announced new plans to audit the payrolls of retired civil servants in a bid to control financial hemorrhage on ghost pensioners.
Cabinet Secretary Henry Rotich noted that the proportion of development expenditure to the national budget has fallen to 28 per cent, up from 30 per cent, while recurrent expenditures have risen from 70 per cent to 72 per cent.
The current state of affairs implies that more resources are being diverted from development to pay salaries and allowances for public officers.
“I think, it’s worth expanding this audit exercise to pensioners because these people were also civil servants and during their time, ghosts workers may have existed,” Rotich told Weekend Business.
“We shall expand after the current one is completed.”
Rotich’s remarks came as the Salaries and Remuneration Commission (SRC) revealed that about half of the 700,000 employees in the public sector are ghost workers.
Preliminary findings of an on-going audit of public service payroll shows that the country could be losing close to Sh1.8 billion annually through payment of salaries to ghost workers. An estimated Sh150 million is paid every month in salaries for employees who are dead, non-existent, retired or sacked, but are still retained in Government payroll. Public sector wage bill is estimated at Sh475 billion and is projected to hit Sh500 billion in the 2014/2015 financial year.
In the 2012/2013 financial year. the amount paid to civil servants in salaries and wages accumulatively stood at Sh458 billion.
SRC chairperson Sarah Serem said about a half of the total workforce in the public sector do not exist.
“We have 700,000 employees in the public sector and there is an indication that close to half of them are ghost workers,” said Serem.
The Devolution and Planning Ministry has started looking for a private sector firm to assist in rationalising the public sector work force in both national and county governments.
Among the key tasks that the private sector consultant will be charged with, include establishing the optimal number of workers within government.
Serem said a huge wage bill that is not commensurate with productivity is a threat to sustainable government expenditures and eats into the limited public resource.
“We want to bring sanity in remuneration by linking it to productivity,” said Serem.
“With all the numbers that we have seen, the public sector wage bill is truly becoming a crisis. It’s worrying,” explained Serem.
The country’s total wage bill to Gross Domestic Product (GDP) currently stands at 13 per cent, which Treasury reckons is unsustainable and way above the seven per cent desired internationally levels. The National Treasury expects the country’s budget for the 2014/15 financial year to drop by Sh100 billion partly due to a reduction in wage bill and interest payments on domestic debt.
A cross-section of economists feel that private investments in the economy stand the risk of weakening owing because of the ballooning domestic debt linked to Government borrowing to pay wages.
“Over borrowing from the domestic market is not healthy to the economy because it crowds out the private sector,” said Samuel Nyandemo, a senior lecturer at the University of Nairobi’s School of Economics.
According to Dr Nyademo, the borrowed funds are also not used productively but to pay wages.
By James Anyanzwa, The Standard
