How salaries gobble up billions in counties as development suffers

Erratic hiring, irregular engagement of casual workers, ghost workers and excessive compensation of county workers are syphoning billions from counties as development suffers.

A new report by Parliament has revealed how the counties have become employment bureaus, spending huge amounts of revenues to compensate employees, some of them who may not be properly hired or who may be ghosts.

The report of the Senate Public Accounts Committee on Auditor General Nancy Gathungu’s report on county executives for the 2023- 24 financial year, was tabled in the Senate last Thursday.

It shows some counties spent as much as 60 per cent of their revenue on salaries alone.

The shambles is widespread and 36 county executives spent more than 35 per cent of revenue to pay salaries. Committee chairman Moses Kajwang’ of Homa Bay tabled the report in the Senate.

“Only 11 counties complied with the 35 per cent wage bill ceiling, while 16 counties exceeded 50 per cent of their revenue on wages, severely constraining operational and development budgets,” the report reads.

Kisii County has the highest wage bill at 60 per cent, the report indicates. Soon after his election, Kisii Governor Simba Arati exposed 861 ghost workers in the county government in a purge across all departments.

“I have caught them pants down, I’m sure they can’t run; there is nowhere to hide,” Arati said at the time. I’m told there are those contemplating resignation but they must account for the sins they have committed,” Arati had said.

The report showed Mombasa spent 57 per cent, Laikipia (55), Elgeyo Marakwet (55) and Nyeri (55) of their annual revenue on compensation of employees.

Murang’a is at 54 per cent, Homa Bay (53), Nyamira (53), Kisumu (52), Taita Taveta (52), Machakos (52), Kericho (50), Bomet (50), Meru (50) and Tharaka Nithi (50).

Others are Garissa (49), Vihiga (48), Baringo (48), Bungoma (47), Makueni (46), Kakamega (45), West Pokot (44), Marsabit (44), Nyandarua (43), Samburu (41) and Embu (41).

Others are Lamu at 39 per cent, Busia (39), Mandera (38), Migori (38) and Kitui (38). The provisions of Regulation 26(1)(a) of the Public Finance Management (National Government) Regulations, 2015, limit the expenditure on employee compensation (including benefits and allowances) to not more than 35 per cent of its annual revenue.

With another huge chunk going towards operations and maintenance – including fuelling of vehicles, office expenses and hospitality – the counties are left with meagre resources for development.

However, while wage bills have hit unsustainable levels, it emerged some funds spent on employee compensation could be ending up in the pockets of cartels. This abuse is due to the payment of ghost workers, manipulations of payrolls, and overall mismanagement of human resources that balloon the wage bill beyond the limit.

“[There are] rampant irregular recruitment practices leading to ghost workers, excessive casual employment beyond legal limits, and improper compensation, including overpayment of allowances,” the report reads.

The report also revealed counties are hiring unqualified staff, ignoring the County Public Service Board Circular and the Human Resource Policies and Procedures Manual for the Public Service dated May, 2016.

In addition, most of the counties still use a manual payroll system, which is prone to manipulation. This is contrary to the law that requires them to use the Integrated Personal and Payroll Database.

“The committee noted the use of a manual system requires manual calculation of deductions, net pay and constant monthly and/or annual updates of the data, which is prone to error or manipulations and susceptible to payroll fraud,” the report says.

It also revealed most county staff are ethnically skewed, with the dominant tribes controlling the positions.

“The committee noted that county executives have breached the requirements of the law to ensure inclusivity and diversity in county public service recruitments,” the report states.

County Government Act, 2012 requires that during hiring, County Public Service Boards should ensure at least 30 per cent of the vacant positions are filled by candidates who are not from the dominant ethnic community in the county.

In yet another shocking revelation, the committee observed most counties do not have an appraisal system for their staff.

"The county executives have failed to put in place a periodic target as a basis for evaluation of their employees at the end of every year and the applicable measures to be taken for the underperformance operational staff appraisal system,” the report says.

“The committee noted with concern that without staff performance management mechanisms in place, there exists a lack of the criteria to monitor performance and appropriately reward the staff,” it adds.

Further, most county employees are earning salaries that are less than one-third of their respective basic salaries. This is contrary to the requirement of the Human Resource Policies and Procedures Manual for the Public Service, 2016, which provides that public officers shall not overcommit their salaries beyond two-thirds of their basic salary.

The devolved units are also not remitting statutory deductions to various entities, including retirement schemes such as Lapfund and Laptrust, loan repayment to Saccos, insurance policy deductions and the County Pension Fund.

“The committee observed that no remittances of employees’ deductions on time leads to nugatory expenditure on the part of the county executive in the form of penalties and interest,” the report states.