MPs intervene as Posta salary arrears hit Sh504m

Posta Kenya workers protest outside their office in Eldoret town on November 2, 2023 over a five-month nonpayment of their salaries.

Postal Corporation of Kenya (PCK) has failed to pay its employees for at least five months, pushing salary arrears to Sh504 million at the end of last month.

Parliament’s departmental committee on Communication, Information and Innovation has made the disclosures while seeking for urgent intervention to bail out the cash-strapped entity.

Lawmakers under the Budget and Appropriation Committee (BAC) have responded to the request by recommending that the house adds Sh800 million to the State department for broadcasting and telecommunications for PCK salary arrears and other critical operational expenses.

The corporation will be hoping that Parliament endorses the proposal so as to give its workers a reprieve.

Posta’s fellow State agencies have become a weak-link in its woes. 

Parliament’s Budget and Appropriation Committee (BAC) document shows various government agencies owe Posta over Sh2.7 billion, including the Huduma Centre, which owes Posta Sh1.6 billion for rentals, and IEBC which is yet to pay Sh1.2 billion for courier services provided by Posta for the distribution of election materials.

Lay off employees

The situation highlights the trail of pain that the government and its entities’ slow pace of settling bills is leaving on contractors and suppliers.

Posta is planning to lay off 504 employees in February 2024 to remain with a headcount of about 1,860 in an attempt to cut costs amid dwindling revenues.

BAC has now recommended that a special allocation be done to settle the pending bill owed to Posta or that any allocation made to government entities owing it are directly deducted to settle the debts.

“The Postal Corporation is facing financial constraints, which has led to a five-month delay in salary payments to its workers,” said BAC. 

“The National Treasury should develop and put in place a mechanism to fast-track payment of the outstanding debt owed by various government entities to the PCK, including ring-fencing part of the allocations to those entities for the debt settlement.”

New competitors

PCK has cut its staff numbers multiple times in the past years, as its business of delivering mail and parcels has come under increased attack from new competitors and expansion of digital communications.

PCK’s Postmaster-General and CEO John Tonui told the Business Daily early November that the upcoming retrenchment will require about Sh1 billion

The corporation that sent home 1,280 workers in 2018 will look into factors such as age, skill set, and staff competency in determining who should be retrenched.

The troubled parastatal has already received the government’s permission to reduce its staff and put others on short-term contracts as it attempts to arrest a massive decline in revenues and profits.

Posta estimates that its payroll costs per month will drop to Sh70 million from the current Sh122 million.

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