PERFORMANCE BASED PAY KEY TO TACKLING RISING WAGE BILL IN KENYA

“PUBLIC SERVANTS MUST LEARN TO BE SERVANTS”

I have read quite enough number of newspapers, watched quite a number of TV interviews…all discussions trying to address this animal called “the Rising Wagebill” If you didn’t know, the government wage bill represents a major share of total public expenditure. Given its significance, developments of government wages are likely to produce significant effects on the whole labour market, public finances and the overall economy. And as a nation, ours has been a debate on the rising wage bill that seems unsustainable. According to the 2012/13 budget the wage bill stood at about Sh458 billion, accounting for 43 per cent of the national budget recurrent expenditure but due to the huge cost of devolution, the current wage bill has risen to Sh630 billion.

If you may recall early last year, President Uhuru Kenyatta gave a directive, that all civil servants, specifically parastatal heads, should take a 10 percent pay cut from their salaries. He further announced that together with his Deputy President, they would take a 20 percent pay cut, to lead by example, indicating that the issue of the wage bill has to be dealt with, as a matter of national concern. The effects of these directives are yet to be felt though, and we may need to wait a little longer to see the fruits.

This, among other short-term measures such as freezing on salary increments, reviewing public recruitment practices, streamlining payroll control and reducing duplication of duties were suggested.

However, all these policy suggestions may not be very effective if the government does not receive value for the taxpayer’s money it spends inform of wages and salaries to public servants. This can only start if public servants understand that they are “servants’’ and not masters to the taxpayers. This attitude must at least, change, if Kenyans have to think of good service from a public office. A public servant must be paid according to their performance. Not because of how long they have been showing up in the same office, but because of the service they have extended to the taxpayers.

Value for the government expenditure on public wage bill can only be achieved through Performance-based pay. There have been efforts by the government to have the civil servants’ remuneration package pegged on performance and job evaluation. In 2013, cabinet secretaries signed their performance contracts. The same is being implemented in most government parastatals. This can provide incentives for public servants, and though inherently difficult in the public sector, policy makers and think tanks should crack a formula of how to implement it.

The values of this kind of compensation plan have far outreaching benefits. It improves service delivery to the public while ensuring efficiency in resource use by public servants. It enables the measuring of results and linking the same to the performance, instilling accountability among public servants and creating a performance oriented culture in the public sector.

Implementing a performance-based form of compensation in public service, just like in private organizations, is however not an easy ride.

There are a number of reasons why pay may not reflect performance. First, many of the larger pay packages are negotiated by those employees being hired from outside the organization. Most often, an outside hire is prompted by poor performance by insiders. So in a sense, the bargaining power of the outsider is increased, regardless of the performance that may be delivered later. It is one of several reasons for the careful planning of executive succession. Further, many pay packages are determined on the basis of what others in comparable jobs, regardless of performance, are being paid. It is not strange to hear that every organization has its salary scales. And on this one, the public service scores best. The job groups are well known to almost all citizens applying for a government job. This creates a natural disconnect between pay and performance. Third, current pay often reflects past performance, not current or expected performance.

Despite these challenges, performance based pay is the best way to deal with inefficiencies, laziness, ghost workers and corruption in the public service. Unfortunately, for majority of Kenyan employees, the pay determines the performance instead. This is the attitude and culture we need to change in order to embrace the performance-based compensation in the public service.