Confusion galore in SOE salary revision

Phub Dem

Almost a month after the salary revision for State-Owned Enterprises (SOEs) was finalised, SoEs are still confused with some provisions of the revision.

A board of an SOE company thought that the minimum 15 percent Perform Based Variable Incentive (PBVI) was payable only for a month, in lieu of the 2019 bonus, and not for a year.

Other confusions concerning the recent revision was discussed yesterday between representatives from SOEs and officials of the finance ministry.

MOF officials clarified that employers would be provided a minimum of 15 percent PBVI for 2019, which implies that SOEs can either pay 15 PBVI every month or provide the amount in one goes by the end of this year.

The SOEs in consultation with officials from the ministry agreed to provide 15 percent PBVI every month for the whole of 2020.

The finance ministry is working on the Performance Management System (PMS) and the evolution guideline for PMS.  Many SOEs agreed to pay 15 percent PBVI every month and then add up the remaining percentage (up to 50 percent) according to the performance of the company.

The PBVI for companies range from 15 percent for satisfactory performance, 25 percent for good, 35 percent for very good, and 50 percent for an excellent performance.

Although SOEs are of the stand that the bonus of the year 2019 should be given because the budgeting for the year was already done last year, the cabinet order clearly states that there won’t be a bonus for the year.

SOEs with the social mandate and fully funded by the government are not eligible for the bonus.

Representatives of SOEs were of the stand that with PBVI in place, signing of performance compact of SOEs’ board with the finance ministry was duplication.

A representative said, only if the government’s intention was to change and evaluate the performance of the board then the signing was valid, otherwise, it was duplication.

He said that finance ministry recommended the nomination of boards and if the board was to sign the compact with the ministry, it was a clear sign of duplication.

“There will be duplication in grading and pay. The duplication will cause a fuss in the PBVI. We have to either choose ministry’s or board’s decision.”

Other issues concerning the revision were on the alignment of percentage increase with grade or level. The alignment saw a huge salary jump in some cases, and a few other SOEs was found to have a different grading system. SOE representatives asked for a uniform corporate-grade and harmonised pay hike in all corporations.

For instance, one representative of a SOE was of the view that the highest regular employee who earned Nu 41,210 before should be paid Nu 55,000- which is the revised pay for the highest grade I. “There is no grading system but only categories. We are facing confusion with the fixation.”

Officials from the finance ministry clarified that the corporate grading system had been in the system starting 2014 and all SOEs must have a uniform corporate grading.

Meanwhile, a few SoEs shared concerns of affordability with regard to the PBVI if the company performs exceptionally well. Others were skeptical because their boards of directors were not clear about the PBVI.

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