Clear the confusion

The finance ministry recalled its notification on State Enterprises (SOEs) salary revision, within 24 hours brewing more confusion.

It lacked clarity and interpretation especially on allowances and working PBVI. The ministry was unaware of some allowances that are agreed between the board and the management of SOEs.

The apex decision making body in all SOEs is the board, led by a senior civil servant, appointed by the government.

When the pay revision was initiated, SOEs submitted their proposals. No SOEs would have proposed to do away with corporate allowance and subsume the annual bonus payout in PBVI. Position specific allowance acts as an incentive to retain and reward highly efficient employees. This is gone now.

The chairpersons could have painted a clearer picture of SOEs because the board approves every allowance the management proposes. Were they even consulted?

What stands out is obvious communication gap between the government and the boards. SOEs say some board members are not even aware of developments in the companies. Even if they were, little do they report to the finance ministry.

For instance, at least one DHI official, not necessarily a director, is a board member of its sister companies. This ensures that the companies adhere to their mandate and targets agreed upon. The case in point is that representatives from finance ministry in respective boards should be in a position to show directions based on the economic policy set by the government. Only then the government could better monitor the performances of SOEs.

But what we see is that the privilege is given to senior government officials irrespective of their expertise. The communication between the owner (MoF) and board is minimal and this is why the government seems to be confused at this point in time.

PBVI is in place in many SOEs where bonus payout is pegged with performance. The methodology and modalities, however, differ from one SOE to another.

In absence of a uniform framework, the question now is how and on what basis a company will be rated ‘satisfactory,’ ‘good,’ and ‘outstanding’.

The Cabinet clarified that a non-profit oriented, socially driven SOE afford would be assessed on social aspects. Can such a company afford 50 percent PBVI every month? What if the SOE in question is dependent on government subsidy? In 2017 alone, subsidies to SOEs amounted to Nu 2.4B.

The government must understand there are some SOEs listed on the stock exchange, answerable to their shareholders- public.

Another question is with regard to the Constitutional provision, which the Opposition has raised. The fourth pay commission’s report defines a public servant as officials who are either term-based appointees or elected – such as contract employees, local government functionaries, Members of Parliament, NFE instructors, etc.

While it generalises public servants as those employees outside the purview of RCSC, corporate employees are excluded. But what the fourth Pay commission has reflected in its report was that the spiralling effect of the public servants’ pay revision would fall on the salaries of corporate and private sector that could ‘negatively’ impact the economy.

We hope the amended notification would clear all the confusions.

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