The World Bank has urged the Kenyan government to impose a two-year hiring freeze in the public sector to rein in the unsustainable wage bill that continues to strain national finances.
In its Public Finance Review report released on Tuesday, May 27, the global lender warned that unchecked public payroll growth could derail key development goals. It emphasized that a temporary hiring suspension would provide room to audit current salary structures and optimize the allocation of existing personnel.
“Adopting a temporary hiring freeze can make space for the government to review the compensation structures and assess the efficient allocation of existing civil servants,” the report stated.
Education Sector Exempted Amid Rising Teacher Demand
Despite calling for a general freeze, the World Bank recommended an exemption for the education sector, citing a growing need for teachers across Kenya.
The report acknowledged that essential services like education require continuous staffing to meet rising demand, and proposed reallocating human resources toward service delivery in key sectors such as health, education, and water management.
Automate Administrative Roles to Improve Efficiency
The World Bank also advised the government to reduce the number of staff performing administrative tasks by automating various public service functions. It noted that shifting personnel from clerical roles to frontline services would not only improve efficiency but also achieve cost neutrality.
“This can allow for staff numbers to be increased in service delivery roles in health, education, or better water management in a context of growing climate impacts, enabling service delivery improvements in a fiscally neutral way,” the report noted.
Redeploy Civil Servants Instead of Hiring Anew
To avoid expanding the wage bill, the World Bank recommended that the government redeploy existing civil servants across ministries and counties instead of prioritizing new hires.
“A rigorous exercise to redeploy skills across the civil service, both at the national and county levels of government, should be undertaken,” the Bank said.
Cut Travel Budgets and Eliminate Irregular Allowances
The World Bank further advised the government to integrate payroll systems, phase out market adjustment allowances, and slash travel-related budgets to create additional fiscal space.
It estimated that cutting travel budgets in half could save the country up to Ksh10 billion, while eliminating irregular allowances could unlock even more resources.
“The majority of the adjustment would, however, need to come from restraining hiring and wage growth,” the report added.
Wage Bill Breaches Legal Threshold
Currently, both the national and county governments exceed the 35% wage bill threshold outlined in the Public Finance Management Act. The World Bank noted that cutting down the wage bill at both levels would free up funds for public investment and service delivery.
“Reducing the wage bill at the national level would generate fiscal space, while reducing it at the county level would increase room for county-level public investment,” the report concluded.
