Corporate pay hike to maintain 15 percent difference

The govt. has given the go-ahead to corporation boards to raise wages as they see fit

Salary: Approving the much-awaited hike in salary of corporate employees, the cabinet also clarified that the raise, which comes into effect retroactively from July 1, 2014 should maintain a maximum of 15 percent difference from salaries of civil servants.

This, the finance minister, Namgay Dorji, said was as per the estimation of the second pay commission’s report, that the pay scales of the regular corporate employees would be about 15 percent higher than that of civil servants.

“This is the guiding principle and the state-owned enterprises  (SOEs) can now take the raise based on the boards’ decision,” lyonpo Namgay Dorji said, indicating that the authority now rests with the boards of individual companies. “We’ve given the green signal to SoEs to go ahead.”

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

But for those SOEs sustaining on government subsidies, the Prime Minister, during a meet-the-press session in October said, will have to justify themselves for the raise.

Pay and allowances of the SoEs comes to around Nu 478.5M annually, which constitutes about 16 percent of their gross revenues.  Should the pay and allowances of SOEs be kept 15 percent higher than the civil service, it would translate into an additional Nu 71.78M.

The pay commission’s report states that, when the first corporations were carved out of the civil service, the pay scales for the corporate sector were at least 45 percent higher than 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 Ministry of Finance,” the report states.

This was also because, unless the differentials are maintained within some acceptable limits, more and more professionals would leave the civil service for private and corporate sectors.

The commission’s report also found that the pay scales of those at the top levels in private and corporate sectors tend to be significantly higher than their counterparts in the civil service.

On the contrary, civil service pay at the lower levels is more generous, and thus it continues to be the preferred option for job seekers at these levels.

In January 2011, civil servants got 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.

Sources from DHI said a report would be submitted to the board this month for approval.

By Tshering Dorji

 

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