1. MANAGEMENT OF SALARIES ALLOWANCES AND BENEFITS Presentation to Institute of Certified Public Secretaries 22 nd -24 th July Nanyuki

2. Presentation Outline 1)Background Information 2)Legal Framework 3)The Role of STC 4)Conclusion June 12, 2016Salaries and Remuneration Commission2

3. Background information  Commission inherited a Public Service remuneration structure that did not recognise/reflect productivity;  Remuneration and benefits were set through ad hoc Committees and Commissions and undue pressure from unions;  Many public service institutions determined their salaries independently; 3

4. Background information cont’d  Consequently, there was great vertical and horizontal disparity and inequity in the payment of remuneration and benefits leading to discontent and frequency of industrial unrest.  The Government set several commissions one of which was Kipkulei the Commission that set up to facilitate harmonization of remuneration in the Public Service  The Commission recommended the establishment of the Permanent Public Service Remuneration Review Board which was in place until the SRC was established  The creation of SRC in the Constitution of Kenya 2010 is an effort to bring all remuneration in public service under one organ 4

5. Management of Salaries Benefits and Allowances The SRC experience

6. Remuneration Setting for State Officers  To address the above challenges and to ensure that the remuneration determined thereafter, is guided by objectivity, is defensible and acceptable, the SRC undertook a Job Evaluation in 2012  Most of the state officers were interviewed, positions assessed and a relative grading structure determined from scores.  Remuneration levels were then attached to the positions after conducting a salary survey. 6

7. Benefits of the Job Evaluation Reduction compression ratio from 1:57 to 1:10 from the highest to the lowest paid state Officers Standardised structure removing disparities brought about by allowances The Worth of every job determined Saving on the wage bill June 12, 2016Salaries and Remuneration Commission7

8. Remuneration for other Public Officers  The Commission has embarked on a comprehensive job evaluation for the rest of the public service.  In the meantime, the Public service remuneration has been re-aligned 8

9. Additional Efforts towards Wage sustainability 1.Advice on remuneration and benefits for the Public Officers 2.Harmonization and restoration of equity in remuneration cycle 3.Policy and legal framework – management of CBA hence reduction in industrial unrest 4.Undertaken a critical analysis of Allowances Payable to the Public Service; 5.Currently undertaking the Job Evaluation for the wider Public Service. 6.Preparation of a Remuneration and Benefit Policy 9

10. The Purpose of the Policy To achieve an effective remuneration and benefits system, where all public sector employees are satisfied that they are fairly, equitably and transparently compensated for their labour. June 12, 2016Salaries and Remuneration Commission10

11. Specific Policy Objectives ◦ A wage bill that is fiscally sustainable & aligned to the tenets of national development; ◦ Public Sector as a competitive employer for highly competent technical and professional personnel; ◦ Fully transparent, fair and equitable Public Sector remuneration and benefits system; and ◦ Productivity and performance-related pay that is the dominant component of the remuneration and benefits package for Public Service employees June 12, 2016Salaries and Remuneration Commission11

12. The Situation Analysis 1.Unsustainable Public Sector Wage bill; 2.Inability to attract and retain adequate number of competent technical and professional staff. 3.Remuneration and Benefits Practices that do not promote Productivity and Performance; 4.Unfairness and inequity 5.Remuneration Systems do not support Professional Development and Career Progression 6.Unfair, inadequate and unsustainable retirement benefits June 12, 2016Salaries and Remuneration Commission12

13. 7. Remuneration System is not aligned to the National Development Strategy; 8. Non appreciation of SRC Mandate 9. Alignment of Remuneration System to National Development Goals Absence of a shared National Philosophy on Remuneration and Benefits June 12, 2016Salaries and Remuneration Commission13 The Situation Analysis cont…

14. Policy Objectives 1.To achieve and sustain Public Sector wage bill 2.To achieve competitive Public Sector remuneration and benefits packages 3.To promote fairness in the Public Sector remuneration and benefits system 4.To restructure the remuneration and benefits system to support professional development and career progression June 12, 2016Salaries and Remuneration Commission14

15. Policy Objectives conti.. 5.To achieve full transparency of Public Sector remuneration and benefits 6.To achieve fairness, adequacy, affordability and sustainability in retirement benefits 7.To promote productivity and performance related pay. 8.To institutionalize procedures for determination of remuneration and benefits across the Public Sector June 12, 2016Salaries and Remuneration Commission15

16. SRC Efforts towards Wage sustainability  Undertaken Job Evaluation for ALL State Officers ( about 3,000)  Setting and harmonization of remuneration benefits levels for state officers  Advice on remuneration and benefits for the Public Officers  Harmonization and restoration of equity in remuneration cycle  Policy and legal framework – management of CBA hence reduction in industrial unrest  Stakeholders engagement and public participation 16

17. SRC Efforts towards Wage Sustainability Preparation of a Remuneration and Benefit Policy (soon to be launched) Undertaken a critical analysis of Allowances Payable to the Public Service; Undertaken Job Evaluation for County Government; Currently in the final stages to undertake the Job Evaluation for the wider Public Service. 17

18. Challenges  Sustainability vs attraction and retention into the Public Service  Clamor for high pay without commensurate productivity  Persistent threat of industrial unrest  Proliferation of allowances  Inadequate compliance  Expansion of public sector (County and National Government) 18

19. The Legal Framework

20. The Constitution of Kenya The Salaries and Remuneration Commission (SRC) is established under chapter 12, Article 230 of the constitution of Kenya, 2010 and mandated to; 20 Set and regularly review the remuneration and benefits of all state officers. Advice the national and county governments on the remuneration and benefits of all other public officers

21. Salaries and Remuneration Act, 2011 6/12/2016Salaries and Remuneration Commission  Section 11 of the SRC Act, 2011, provides a)Inquire into and advice on the salaries and remuneration to be paid out of public funds; b)Keep under review all matters relating to the salaries and remuneration of public offices; c)Advice the national and county governments on the harmonization, equity and fairness of remuneration for the attraction and retention of requisite skills in the public sector; d)Make recommendations on the review of pensions payable to holders of public offices;

22. a)Conduct comparative surveys on the labour markets and trends in remuneration to determine the monetary worth of the jobs in public offices; b)Determine the cycle of salaries and remuneration review upon which parliament may allocate adequate funds for implementation; c)Make recommendations on matters relating to the salary and remuneration of a particular state of public officer; d)Perform such other functions as may be provided for by the constitution or any other written law June 12, 2016Salaries and Remuneration Commission22

23. Constitutional Principles of Pay Determination 6/12/2016Salaries and Remuneration Commission The commission takes into account the following principles in performing its function-Article 230 (5) a)The need to ensure that the public compensation bill is fiscally sustainable; b)The need to ensure that the public services are able to attract and retain the skills required to execute their functions; c)The need to recognize productivity and performance; d)Transparency and fairness; e)Equal remuneration to persons for work of equal value (Section 12 (1) of SRC Act, 2011.

24. Powers of the Commission 6/12/2016Salaries and Remuneration Commission Section 13 (1) of the SRC Act, 2011 provides that the commission shall have powers to:- a)Gather, by any means appropriate, any information, it considers relevant, including requisition of reports, records, documents or any information from any source, including government authorities b)Interview any individual, groups or members of organizations or institutions and, at the commission’s discretion, conduct such interviews c)Hold inquiries for purposes of performing its functions under this Act d)Take any measures it considers necessary to ensure that in the harmonization of salaries and remuneration, equity and fairness is achieved in the public sector

25. The Roles of SRC Functions and Powers

26. Key SRC Roles Harmonise remuneration and benefits across the public service; Continuously provide advice on the benefits and remuneration of the public service; Undertake studies that will provide information on remuneration; Undertaking regular review of salaries and remuneration for stakeholders; June 12, 2016Salaries and Remuneration Commission26

27. Conclusions

28. Conclusion A balance between the constitutional principles of remuneration determination is a reality that Kenyans must accept. It is desirable to pay as much as employees want, but the truth of the matter is that no organization including Government can pay what it doesn’t have. Thus, fiscal sustainability is critical in public remuneration determination. 28

29. THE END THANK YOU June 12, 2016Salaries and Remuneration Commission29