How civil servants pay is straining country's development

National Treasury CS John Mbadi/ FILE

Kenya’s growing public wage bill is emerging as one of the biggest threats to economic stability, consuming a large share of national revenue and squeezing out funds for key development projects.

New figures from the National Treasury show the government’s salary obligations to civil servants have risen sharply in recent months, piling pressure on a strained budget already burdened by heavy debt repayments and sluggish revenue growth.

According to Treasury data, the country was spending Sh75 billion monthly on salaries in January this year—a figure that climbed to Sh80 billion by October.

This represents a Sh5 billion increase in just 10 months.

The Salaries and Remuneration Commission (SRC) adds that over the past three years, the total wage bill has ballooned by Sh135.9 billion, rising from Sh1.035 trillion to Sh1.171 trillion.

National Treasury CS John Mbadi told Parliament on Tuesday that the surging recurrent expenditure is choking funds meant for development.

“If not checked, the trend may not be sustainable,” he warned.

He said that, coupled with rising loan repayments, the growing wage bill has left the government with almost nothing to spend on critical infrastructure, health, and education projects.

In the 2023-24 financial year, Kenya’s total revenue stood at Sh2.7 trillion, of which Sh1.38 trillion was spent on debt repayment.

With an additional Sh960 billion going to salaries, the government was left with barely Sh200 billion for all other obligations—forcing it to borrow to keep basic services running.

“Up to January this year, we were paying our wage bill per month at Sh75 billion, translating to Sh900 billion per year. Today, it has gone up by Sh5 billion per month and is now Sh80 billion,” Mbadi told MPs.

“That is Sh960 billion per year, and that is not a very good position to be in. It is not sustainable.”

Appearing before the National Assembly’s Education Committee to discuss the funding of collective agreements for university and college staff, Mbadi cautioned against overstraining the fiscal space.

He said up to 2013, the government was spending about 16 per cent of ordinary revenue on wages.

That figure has now surged beyond 40 per cent in less than 12 years, breaching legal limits.

The Public Finance Management (PFM) Act, 2012, and accompanying regulations cap the wage bill-to-revenue ratio for both national and county governments at 35 per cent.

The warning came as the government grapples with limited fiscal space, rising debt repayments and sluggish revenue performance.

Treasury has instructed ministries, departments and counties to freeze new recruitment and adopt performance-based pay structures to control the growth.

Mbadi also revealed that Kenya almost defaulted on its debt obligations last year due to the shrinking financial space.

“The country almost defaulted in paying their loan last year,” he told the committee.

 “We would actually be talking about whether we can sustain our workforce employment. I agree that our lecturers and staff in public universities are not adequately remunerated—they need better salaries—but we must also be alive to the challenges that we are facing.”

Mbadi's remarks came amid renewed pressure from lawmakers and unions pushing for higher pay and expanded staffing, moves that could further strain public finances ahead of the 2025-26 budget cycle.

The CS, however, struck an optimistic tone, saying the economy is showing signs of recovery, but warned that reckless spending could undo recent gains.

“It would interest this committee and the Kenyan public to note that our economic stability is improving,” Mbadi said.

“If you look at our macroeconomic fundamentals, they are better than they were two or even one year ago. But if we do not maintain this trajectory, we will slide again to where we were—and the effect may be disaster.”

In the last financial year, 2024-25, the Salaries and Remuneration Commission data indicates that wage bill in counties had assumed an upward trend rising from Sh38.6 billion in the first quarter to Sh55.68 billion in the second quarter.

In the third quarter, a slight drop was recorded to Sh52.6 billion before it climbed again to Sh68.8 billion in the fourth quarter of the financial year.

According to SRC records, the total revenue increased from Sh87.91 billion in the first quarter, to Sh146.8 billion in the second quarter, but dropped to Sh96.12 billion in the third quarter.

In the fourth quarter, the revenue was projected to rise to Sh143.49 billion.

In the national government, SRC’s data for the last financial year indicates the wage bill rose from Sh151 billion in the first quarter, to Sh165.26 billion in the third quarter.

The same was projected to rise to Sh184.4 billion in the fourth quarter of the 2024-25 financial year.

“On the other hand, in the 2024-25 financial years, total ordinary revenue exhibited an upward trend increasing from Sh348.6 billion in the first quarter to Sh378.2 billion in the third quarter, and projected to rise to Sh440.9 billion in the fourth quarter,” SRC states in a report.

The data is captured in the recent SRC’s Fourth Quarter Wage Bill Bulletin (April–June 2025).

While recruitment drive is necessary to address service delivery gaps, fiscal experts warn that the pace of hiring is unsustainable given the current revenue performance.

“Generally, the number of public service employees has been on a consistent upward trend over the years, crossing the one million mark in 2024 to reach 1.023 million employees,” SRC said in the report.

An analysis of the Economic Survey 2025 shows that wage employment in the modern sector increased by 2.4 per cent from 3.1 million in 2023 to 3.2 million persons in 2024.

Out of the number, about 2.2 million are in the private sector while one million are in the public space.

From the SRC records, the number of public sector employees rose from 937,900 in financial year 2021-22 to 1,023,200 in financial year 2023-24.

The average monthly gross salary per employee also increased from Sh70,229 to Sh71,784 over the same period.

According to the 2025 survey, the surge in employment in the public service was particularly witnessed in five categories. They are ministries and other extra-budgetary institutions, the Teachers Service Commission (TSC), parastatals, corporations controlled by the government and county governments.

From the records, TSC has consistently remained the largest public service employer, registering the highest growth in employment at 5.2 per cent.

Its employees increased from 390,400 in 2023, to 410,700 employees in 2024.

Ministries and other extra-budgetary institutions emerged as the second largest public service employer, followed by the county governments with 236,700 and 226,500 employees in 2024, respectively.

INSTANT ANALYSIS

Kenya’s wage bill currently accounts for more than 45 per cent of total revenue, far above the 35 per cent threshold recommended by the Public Finance Management regulations. Economists warn that unless urgent measures are taken, the government may be forced to borrow more to fund development—worsening the country’s fiscal deficit.