Corporate pay hike finalised at 19-25 percent

Revision to come into effect from July 1, 2014 

SOE: In what could be considered a Losar gift, the pay revision for state-owned enterprises (SoEs) formally came through, almost eight months since the civil servants’ salary was revised.

According to the February 16 guidelines, the finance ministry issued, the basic pay of corporate employees should be revised between 19 percent and 25 percent within various levels.  The revision will come into effect from July 1, 2014.

Corporate allowance will also be revised from 20 percent to 25 percent.

A finance ministry official explained that, similar to the civil service, the revision would be higher among the lower grades, and as it reaches the top, the revision would slide in proportion.

For instance, those in grades one, two and three would get a revision of maximum 19 percent on their basic salary, while those between grade four and eight will fall into the 21 percent revision bracket.

A maximum of 23 percent increase on the basic salary would be applicable for those between grades nine and 14.  For those below grade 14, the basic salary would be revised by 25 percent.

The official also explained that the ministry has only fixed the maximum ceiling for revision. “But depending on the affordability of the companies, they can go for a lower figure,” he said.  The board of individual companies would decide the revision.

As for the employees on contract, including the chief executive officers appointed on fixed term, the pay scales should be governed by the contract agreement and would not change.

The guideline also states that the position specific allowance, which may be given to employees based on responsibilities, criticality of the position and scarcity of skills, should be capped at three percent of the basic salary as of June 30, 2014, and is subject to annual review by the board.

The board, the guideline states, must ensure that companies with different grading system align their grades, as prescribed by the ministry, based on the pay scale.

If employees have been receiving higher total pay and allowances than the one prescribed on the new guideline, it would be restructured to fit in the revised salary scale, but total payout to such employees shall remain unchanged, meaning they would continue to receive the pay package drawn currently.

The pay and allowance guidelines, however, is only applicable to companies in which the direct shareholding of the finance ministry is more than 51 percent.  The companies are Bhutan Development Bank limited (BDBL), National Pension and Provident Fund (NPPF), Bhutan Agro Industries limited, Bhutan Broadcasting Service, Bhutan Post, Kuensel corporation, Food corporation and National Housing Development corporation limited.

However, companies with equity base of more than Nu 300M, and earnings of more than Nu 500M per annum, excluding grants and subsidies, are categorised separately and its employees enjoy higher pay scales.  BDBL and NPPF fall in this category.

The second pay commission report states that, considering their performance and expenditure growth in past five years, the gross revenue of SOEs will be sufficient to meet the 15 percent increase, except for Bhutan Post and BBSC.

The report also states that, when the first corporations were carved out of the civil service, the pay scales were at least 45 percent higher for the corporate sector when compared to the civil service.

“In recent years, the differential reduced to 30 percent and then to the present 15 percent, which have been reached through certain understanding between the corporate bodies and the finance ministry,” the report states.

In January 2011, civil servants received a 20 percent raise on the salary scale of 2006.  Almost a year after, a 15 percent pay hike, with an additional 20 percent corporate allowance was approved for the corporations.

Meanwhile, DHI has its own pay scales, based on the contractual nature of the appointment of its employees.  DHI’s salary and allowances structure has three levels- professional/corporate, operational, and wage services.

By Tshering Dorji

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