Policy Paper No. 05 of 2013 on A Comparative Study on Public-Private Sector Wage Differentials in Kenya

Abstract

One of the key issues of public debate and attention in Kenya is the difference in wages between the public and private sector, which has made it difficult for the public sector to attract and retain talent. While surveys from developed countries show that public sector wages are, on average, higher than those of the private sector, evidence from developing countries is either limited or non-existent. The general perception is that employees in the private sector, particularly the highly skilled ones, earn much higher salaries compared to their public sector counterparts. An additional problem is the perception that there are even wider disparities within the public service itself, with those in the higher cadres earning disproportionately higher salaries. Also, within certain levels in the public service, education and experience do not seem, as they should, to account for differences in the wages. As a result of these perceptions, and coupled with the rising cost of living, various groups of public servants have during 2011-12 “downed their tools” to demand higher wages. It is believed that wage differences, both within the public service and between the public service and the private sector, lower morale and in effect output in the public sector.