Gvt at crossroads over payrise for teachers and civil servants

The government finds itself on the horns of a dilemma over a salary raise for teachers and civil servants that is due in June, coinciding with the planned referendum.

Distressed by a rising debt burden and plunging revenues due to the Covid-19 pandemic, a pay rise for the entire public service workforce will further drain government finances. 

So intense is the pressure that job cuts expected next year are reportedly among conditions of a deal that Kenya has reached with the International Monetary Fund (IMF) for a new loan.

Yet, given teachers and civil servants are crucial voter constituencies, the government would have to appease them to avoid a further backlash in the middle of a seemingly unpopular Building Bridges Initiative (BBI) referendum campaign.

The last time civil servants secured a Sh100 billion pay rise was in 2017 in the lead-up to the re-election of President Uhuru Kenyatta.  According to the Salaries and Remuneration Commission (SRC), ongoing job evaluation (JE) and salary market surveys will inform the pay increment for civil servants and teachers, whose collective bargaining agreement with their employer will be due for renewal.

“TSC and civil servants salary review will take place at the same time in June 2021 when the exercise will be over,” said SRC chairperson Lyn Mengich. She said public participation on the salary review closes on December 22.

“The salary review for civil servants was launched in September and is ongoing. Kenyans have up to December 22 to give their views,” said Ms Mengich.

SRC’s memorandum on the draft remuneration guidelines for the public sector, which call for public participation, has officially paved the way for the pay increment for civil servants. Under the guidelines, remuneration and benefits, reviewed once every four years, are due in June 2021.

The review will coincide with the renewal of collective bargaining agreements and employment contracts for teachers under the Teachers Service Commission whose salary proposals are already with the SRC.

“There are two exercises that we are undertaking between now and May 2021; job evaluation (JE) and carrying out market surveys in terms of salaries. We have got to conclude those two processes,” Ms Mengich explained. Already, the Kenyan National Union of Teachers (Knut) is bristling for a fight with the TSC over claims that they were not involved in the current salary negotiations.

“TSC sneaked in recommendations to the SRC so that the government could impose it on us. We are in a world of acrimony,” said Knut Secretary-General Wilson Sossion.

“The right process of negotiations is commencing a meeting in accordance with the law and allowing us to justify our demands. And, once we do that, we can submit our demands to the TSC,” Mr Sossion said.

“We do not know the figure for the new CBA because it has not been negotiated. And yet the new CBA must come into place by July 1 next year,” he added.

 Mr Sossion further said: “The county governments are not getting their allocations; the doctors are on strike for simple things such as PPEs and allowances. That tells you the government is broke.”

 Knut has threatened to strike if the TSC fails to follow the law in negotiations for the next CBA for teachers. The Kenya Union of Post Primary Education Teachers (Kuppet) are also at a loss as to how much pay rise their members will get.

“We began the process by giving the TSC our proposals in Naivasha sometime last year. When and if they consult SRC, that is not our business. What we want is our employer to meet us to give us their take,” said Kuppet national chairman Omboko Milemba.

Covid-19 has hit revenues hard at a time the government is facing growing demands for money from striking medics, teachers, civil servants and politicians pushing the referendum.

Faced with revenue shortfalls amid the coronavirus-related disruptions and the push to complete projects ahead of President Uhuru Kenyatta’s exit, the National Treasury is expected to accelerate borrowing over the next two years. The Budget Review and Outlook Paper estimates that the government will borrow Sh600 billion from the domestic market up from Sh494 billion.

Last week, Treasury Cabinet Secretary Ukur Yatani said tax reprieves announced in April to cushion Kenyans from the effects of Covid-19 will end on December 30.

Mr Yatani declined to comment on whether the government will pay heed to IMF demands to sack civil servants.

Economists and tax experts have criticised the decision to end tax holidays arguing it is unlikely to increase revenues.

“In reality, there is no end in sight of Covid-19 even though there is a Covid-19 vaccine. This business of reverting to Tax Law (Amendment) Act, 2020 is a wrong move,” said Nikhil Hira, a tax consultant and director, Bowmans Kenya.

“The whole purpose of it was to help boost the economy to make it easier for companies and individuals to have more spending power,” the tax expert said.

He added: “The bottom line is that, for most of 2020 since March, companies have been laying people off and consumers are not spending because they don’t have money and, of course, businesses are not performing well.”

“In fact, they are reducing and are laying people off. It is sort of a vicious circle. The economy should start taking off hopefully in June 2021,” Mr Hira said.

Mr Ken Gichinga, chief economist at Mentoria Economics, also criticised the government’s plans to borrow more money.

“The government plans to raise this money by ending the temporary tax relief measures that were instituted in April. However, given that business conditions remain subdued, we might end up with a Laffer curve situation whereby an increase in taxation rates does not necessarily translate to an increase in government revenue,” said Mr Gichinga.

“The net effect is that the business environment deteriorates and unemployment increases because funds that should have gone to investing in business growth are diverted towards government debt,” Mr Gichinga added.

The debt situation has also worsened the country’s economic situation.

Given the current and projected expenditure demands, it is estimated that the Kenyan debt stock could reach Sh9.2 trillion in the financial year 2022/23.

The debt situation is so critical that Kenya plans to spend Sh904.7 billion on debt repayments this financial year ending June 2021 from Sh707.8 billion the previous year against expected taxes of Sh1.52 trillion.

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