From the slow, negligible economic growth to the recent COVID-19 pandemic, millions of Kenyans have been affected. Most have been pressured to take pay cuts as others have been forced into the unemployment bracket as a result of business closures.
These economic consequences have not spared the Government as well. It has been forced to make a reduction and, in most cases, a complete halt when it comes to recruitment. Those holding government jobs are in a constant state of worry, as they no longer enjoy the job security they were used to. This is primarily due to the fact that their employer is looking for ways to reduce her recurring expenses amidst increasing expenditures, rising debts and reduced financial assistance.
As of November 2020, Kenya’s public debt stood at Sh8.41 trillion according to the Treasury in its Post Covid-19 Economic Recovery Strategy. As of January 2021, the situation has only gotten worse as the country started repaying the Chinese loans it used to construct Phase one of the Standard Gauge Railway (SGR).
The loan is expected to be repaid in thirty instalments between January 2021 to July 2035. Furthermore, Kenya’s expenditure is expected to hit Sh1tn once the next financial year starts in July as its debt service suspensions from China and the Paris Club come to end.
Facing a budget deficit, the Government is forced to look for ways to increase its revenue while at the same time reduce its expenses. Ordinarily, increasing taxes on goods and services would have been the easier root, however, with a pandemic-battered economy whose inflation is spiraling, that is one side of the coin the Government would rather close its eye to, lest they want to ignite a revolution.
Reducing its wage bill offers a soft landing. It is what the Government is likely to jump on to, especially with the Breton Woods Institutions’ big hand in the country’s Treasury affairs. We all know these institutions’ appetite for structural adjustments. We are also aware of the devastating consequences of the previous structural adjustments, pushed by these institutions, to the social fabric of the society.
Already, word on the street has it that the Government is mulling pushing its older workforce into early retirement. We really hope and pray that it will not come to that. Of all the things the Government can do to bring back its finances to manageable levels, retrenchment, in the midst of a pandemic, should be on the bottom of that list.
