As the government signals intentions to keep restructuring the country’s wage bill over the next four financial years, more civil servants may find themselves unemployed or compelled to retire.
Treasury announced in the 2025 Budget Policy Statement, submitted to the National Assembly on Thursday, February 13, that it aims to reduce the national wage bill as a proportion of the country’s revenue from 24.6% in the current financial year to 17.4%.
The government intends to reduce the wage bill by 2.7% to 21.8% in the upcoming financial year starting in July. Of the Ksh4.263 trillion earmarked for government expenditures from July this year to June next year, Ksh3.096 trillion will be allocated to recurrent expenses, which includes the wage bill.
The law stipulates that the government’s spending on employee compensation, which encompasses benefits and allowances, must not surpass 35 percent of the equitable share of revenue raised at the national level plus additional revenues generated by the government.
The reduction aligns with the declaration that all public organizations exhibiting poor performance will be closed by the government. This follows a cabinet decision to dissolve and merge certain parastatals, which is estimated to impact at least 5,000 civil servants.
This month, Eliud Owalo, who serves as Deputy Chief of Staff overseeing performance and delivery management in the Executive Office of the President, announced that the government will assess the performance of ministries, departments, and agencies (MDAs) and allocate funding based on that performance in the future.
The administration of President William Ruto has already implemented performance assessments for all government ministries, state corporations, and tertiary institutions.
“Our government’s approach is to ensure that organisations that consistently underperform do not continue to drain the exchequer.” These organisations ought to be permitted to expire naturally.
He added a warning that the government would start to provide more funding, among other rewards, to Chief Executive Officers (CEOs) and employees of parastatals who perform well, while those who do not meet performance expectations will be allowed to “die a natural death.”
Government Spokesperson Isaac Mwaura stated last year that about 43,976 public servants aged 55 and over are projected to retire by 2029, including approximately 7,000 expected to retire in the current financial year.
