Private firms sack workers as State wage bill continues to rise

The government appears unable to tame its spending, with revelations that the public service wage bill went up Sh5 billion this year even as the private sector has been forced to offload workers.

Several companies have laid off workers in the last two years, with a majority of them citing a difficult business environment associated with increased taxes.

The Affordable Housing Levy, and the enhanced National Social Security Fund and the Social Health Insurance Fund deductions have raised the cost of labour as employers are required to match what the employees contribute.

As a result, some of the businesses such as G4S, Tile & Carpet, and KK Security, issued redundancy notices.

“Due to a decline in production demand, economic challenges and strategic realignment, it has become necessary to downsize operations at our production plant to maintain the company’s long-term viability,” read the notice by Tile & Carpet dated November, last year.

By January, 5,567 workers had been sent home, according to the Federation of Kenya Employers (FKE).

But while private firms are struggling, National Treasury Cabinet Secretary John Mbadi detailed how the government’s wage bill increased in just two months, citing recruitment of junior secondary school teachers.

“Our salary wage bill has moved from Sh75 billion from where it was in December (2024) to Sh80 billion in January (2025)," he told the National Assembly two weeks ago.

An update from the Salaries and Remuneration Commission (SRC) released on Tuesday shows national government’s personal emoluments in the first quarter of 2024/25 stood at Sh111.09 billion compared to Sh120.99 billion in the same period in 2023/24.

While the wage bill to ordinary revenue has reduced from 54.77 per cent in financial year 2020/2021, it is still higher than the recommended 35 per cent as it stood at 46.23 per cent in 2023/24.

SRC notes that as the largest employer in public service, the Teachers Service Commission registered an employee growth of 8.72 per cent in 2023, while county governments registered a growth of 1.89 per cent to 221,400 employees.

Employment in parastatal bodies and state corporations grew by 1.12 per cent and 1.04 per cent in 2023 and 2024 respectively, while employment in ministries and other extra-budgetary institutions registered an increase of 3.36 per cent.

“The public service wage payments grew by 6.36 per cent from Sh1.04 trillion in financial year 2021/2022, to Sh1.1 trillion in 2022/2023, and estimated to grow further by a similar rate to Sh1.17 trillion in financial year 2023/2024,” says SRC.

During the Central Organisation of Trade Unions Annual Prayer Day on Sunday, Secretary General Francis Atwoli dismissed claims of tough business environment by employers.

He said whenever an increase in minimum wage is announced by the government, employers around the matter delaying its implementation.

At last year's Labour Day celebrations, FKE Chief Executive Jacqueline Mugo called for the delinking of wage adjustments, including statutory minimum wage, from the international day.

“As at today, no minimum wage council has met to deliberate and advise on the minimum wage adjustments as required by law. Therefore, any call to adjust minimum wages without following the laid down procedure and law undermines dialogue and tripartism,” she said.