Large Wage Bill Restrains Development Investment

The projected Sh1.1 trillion public sector salary bill for the fiscal year that concluded in June 2023 will put additional pressure on spending on development projects.

According to data from the Salaries and Remuneration Commission (SRC), the government’s wage expenditures likely increased from Sh1.03 trillion in the previous year by 6%.

The nation spends less on development, which is designed to promote economic growth, as evidenced by the high salary expenditures relative to revenue.

The amount spent is equal to half of the nation’s tax revenues, which totaled Sh2.16 trillion in the most recent fiscal year, much beyond the 35 percent level that is generally advised.

Long-term effects on the nation’s human capital include reduced investment on development projects like roads, hospitals, schools, and other infrastructure.

The Teachers Service Commission (TSC), the largest employer in the public sector, spent an average 33.8 percent (Sh372.1 billion) of the anticipated Sh1.1 trillion that was paid to civil officials.

The TSC employs 37% of people working in the public sector, followed by 24% of those working for ministries and other extra-budgetary entities.

The number is expected to reach Sh1.17 trillion in the current fiscal year, despite the government’s earlier attempts to control the pay bill and focus resources on development by freezing employment.

According to the Economic Survey, there were 937,800 people employed in the public sector, up 216,000 over an eight-year period.

“The total wage bill has been growing at an average rate of 7.2 percent over the last five years, and is projected to continue growing, but at a slightly slower rate,” said SRC in the report.