World Bank proposes two-year hiring freeze to control Kenya’s public wage bill

The World Bank has recommended a two-year freeze on public sector hiring to help control Kenya’s rapidly increasing wage bill, which poses a threat to the country’s economic stability.

This measure aims to reduce government spending and redirect funds to key development areas such as infrastructure, education, and healthcare.

Kenya’s public wage bill reached 881.4 billion shillings last year, up from 832.7 billion in 2023, according to the Kenya National Bureau of Statistics’ 2025 Economic Survey.

The public sector remains attractive due to job security and generous allowances.

The World Bank advisory noted that public workers earn more than their private sector counterparts when allowances are included.

In 2015, the public sector wage premium was estimated at 50% compared to the private sector.

The Bank’s data shows that public employees with secondary education earn 18 percent more, while those with tertiary education earn 15 percent more than similar private sector workers.

This reflects a concentration of highly educated workers in the public sector, which may affect the private labor market.

The Bank said the hiring freeze would allow the government to review compensation structures and better allocate existing staff.

With many civil servants expected to retire soon, the government could also redistribute staff across institutions more efficiently.

The World Bank’s Fiscal Policy for Growth and Jobs report said, "Alongside other savings, some roles can be automated to reduce the number of staff in routine administrative roles. In turn, 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 recommends a thorough redeployment of skills across both national and county government levels instead of hiring new staff.

However, certain sectors like education with growing staffing needs should be exempt from the freeze.

The Bank also urged the Ministry of Public Service to fully implement the Human Resource Information System to improve management and payroll controls.

It called for phasing out the market adjustment allowances and incorporating proper skill compensation into basic salaries.

"To address the issue of double compensation, it is recommended that the market adjustment be phased out as initially envisioned while ensuring that the basic salary adequately compensates for the required skills," the report stated.

It further recommended reviewing public sector salaries to ensure they are competitive yet sustainable, and aligned with the private sector to balance skilled labor distribution.

The World Bank also suggested introducing performance-based pay to boost productivity and efficiency.

It stressed the importance of regular audits and reviews to maintain transparency and compliance.

While the national government has generally maintained the wage bill within limits, many county governments struggle to meet fiscal targets set by the 2015 Public Finance Management Regulations.

Counties, which employ about 22% of public workers, have grown their workforce by 23.9% since 2018, reaching 221,400 employees in 2023/24.

In 2023/24, the wage bill for county governments took up about 44.2 percent of their revenue, exceeding the recommended target of 35%

Only six counties met or stayed below the target, while nine counties spent 50 percent or more of their revenue on wages.