As chair of the SRC, one of the big conversations you led was about keeping Kenya's public wage bill at 35 per cent or below. Has that target been achieved?
The 35 per cent is a ratio of the wage bill to revenue. Because revenue has grown in recent years, we are much closer to that target. I don't have the exact figure now that I am no longer in SRC day-to-day, but I can confidently say we are near that number. Remember, the Constitution requires that not more than 35 per cent of revenue should go into wages and related emoluments. It's not optional.
So essentially, Kenya should not be spending more than 35 per cent of all revenue on salaries and overheads?
That balance is critical because if you go above 35 per cent, it eats into development spending. The Constitution also requires that at least 30 per cent of revenue go into development and service delivery. Overshooting on wages automatically undermines that.
When decisions are made on salary increaments, are they always pegged on actual revenue performance?
Affordability and fiscal sustainability must guide SRC's decisions. You cannot ignore the economic realities. So, while numbers are important, it's not just number crunching. We also consider the state of the economy, government priorities, and even the mood of the country.
Let me take you to Parliament. Every time a new administration comes in, there is often a rush to increase pay or create new benefits. When such bills pass, does SRC just implement them?
The law requires that before any bill touching on remuneration is passed, SRC must give input upfront. It's not advisory in the casual sense, it's constitutional. SRC gives binding guidance before a bill is debated. Of course, Parliament can still pass laws contrary to the advice. In such cases, SRC's recourse is to petition the President not to assent or to challenge it in court. During my tenure, we had several such cases.
One sensitive subject has been pensions, especially the recent push for enhanced benefits for judges. What's your take?
That proposal was problematic for two reasons; affordability and equity. The bill sought to grant judges enhanced retirement packages, transport allowances, medical cover, benefits for spouses and children, even diplomatic passports and VIP lounge access. If approved, this would cost taxpayers billions. Yes, pensions could be improved. But the real issue is; who pays?
So the problem isn't whether pensions should increase, but who foots the bill?
Precisely. Pensions are a shared responsibility between employer and employee. For public servants, the employer is the government, but government money is taxpayers' money. Judges already contribute 7.5 per cent while the government contributes 15 per cent into their fund. Asking taxpayers to shoulder extra lavish benefits retroactively, is unfair and unsustainable.
You mention equity. Why is that so central?
Because the Constitution demands fairness. If you grant judges enhanced pensions, governors, deputies, MPs, and other State officers will line up. They'll have a legal basis to demand the same. And if extended to all public officers, the cost could balloon to over Sh50 billion annually. It's simply not sustainable.
Some of these proposals even peg pensions on inflation. Doesn't that worsen the affordability issue?
I'm not aware of any pension scheme, even in the private sector, that guarantees automatic inflation adjustments. Normally, actuarial evaluations determine if a scheme can afford increases. Inflation-indexed pensions would strain government finances heavily, especially during inflation spikes. This is why such clauses are rare globally.
People say Kenyan pensions are too low compared to international standards. Is that a fair argument?
You can't just lift global statistics and apply them here. Most of those standards are drawn from developed economies that have already met basic needs education, healthcare, and infrastructure. Kenya still struggles with these fundamentals. Our pension replacement ratio of 30 to 40 per cent reflects our stage of development. It is more realistic than aspiring to 70 per cent that we cannot fund. We must live within our means.
Let's talk about the funding model. Are these pensions funded directly from revenue or from a dedicated fund?
We now operate largely under a defined contribution scheme, the Public Service Superannuation Scheme. Employees contribute 7.5 per cent and the government contributes 15 per cent. Pensions are funded from this pool, not directly from the exchequer. That's sustainable. However, the judges' bill sought to retain elements of the old defined benefit model, where the government guarantees payouts regardless of contributions. That's what makes it costly and risky.
So when you hear these expansive packages, what's your verdict?
Kenya cannot afford them. Our priorities remain education, health, and infrastructure. Until taxpayers can see improvements in these areas, asking them to bankroll extravagant retirement perks for a few is inequitable.
Critics argue SRC focuses too much on ceilings, not on lowering salaries where they are excessive. Has SRC ever recommended pay cuts?
Employment contracts are binding. Globally, and even under ILO (International Labour Organization) standards, you don't just cut salaries unilaterally. It must be a negotiated process. During Covid-19, some employers, including the government, discussed temporary pay cuts with employees to survive the crisis. But SRC or any employer cannot simply announce reductions without due process.
So essentially, unless employees agree, pay cuts are legally untenable?
Exactly. That's why SRC focuses on rationalisation, fairness, and sustainability, not arbitrary cuts. We also undertake regular salary reviews, but any changes must balance productivity, equity, and the country's fiscal position.
Many Kenyans feel public servants, especially politicians, earn too much compared to ordinary citizens. How do you reconcile that?
That's a legitimate concern. SRC has worked to harmonise pay, eliminate unnecessary allowances, and set limits that reflect Kenya's economic realities. But remember, equity cuts both ways. If you underpay critical professionals' doctors, teachers, judges you risk losing them to the private sector or other countries. The challenge is always finding that sweet spot between fair pay and fiscal sustainability.
What's your advice to Parliament and the public over the pension debate?
Parliament must legislate responsibly, considering not just today's demands but tomorrow's burdens. The public, as taxpayers, must also demand accountability. Pensions are important, but they should be funded fairly, sustainably, and equitably.