Civil servants will get a 5 percent to 24 percent hike on their basic salary if parliament passed the proposed Pay Structure Reform Bill of Bhutan 2022.
Finance Minister Namgay Tshering, presenting the Bill in the National Assembly yesterday, said that the Bill would ensure greater transparency and accountability in the public service in line with the on-going transformation efforts.
He added that a clean wage system would provide a pay structure where various allowances will be subsumed into one single wage. “The proposed pay increment ranges from 5 percent for the cabinet secretary to 24 percent for the drivers.”
Lyonpo said that the fifth Pay Commission found 30 different types of allowances, which were an administrative burden; allowances are not reflected in the pay slip.
For example, cabinet secretary’s existing minimum basic pay is Nu 84, 180 per month, excluding house rent allowance (HRA) of Nu 16,835 and communication allowance (CA) of Nu 2,000.
According to the Bill, cabinet secretary will get an additional one-off 5 percent indexation (to cover inflation) of the minimum basic pay equivalent to Nu 4,210 per month. This will increase the pay by 5 percent on the basic pay.
Similarly, a driver draws a minimum monthly basic pay of Nu 10,550 per month, excluding the HRA of Nu 3,500 per month.
The Bill proposes an additional one-off 5 percent equivalent to Nu 530 per month and an additional Nu 2,000 lump sum one-off fixed payment monthly. It shows an increment by 24 percent on the basic pay.
As per the Bill, P1 to P4, P5 to S4, and S5 and below will get a lump sum one-off fixed payment to mitigate hardship of Nu 1,000, Nu 1,500, and Nu 2,000 per month on basic pay, respectively.
The prime minister, ministers and equivalent positions, members of parliament, constitutional post holders, local governments, civil servants at level EX3 or ES3 and above and others will see a 5 percent increase in the pay hike with 5 percent indexation monthly.
In case the country’s domestic revenue falls beyond the recurrent expenditure, the government can withdraw one of these allowances.
“The continuity of the one-off payments of 5 percent indexation and the one-off fixed payment shall be reviewed by the government on a periodic basis to give the government the flexibility and levers to adjust to the fiscal situation of the country from the variable pay,” the Bill states.
The Bill also proposes leave encashment (LE) of one month’s minimum pay scale to be prorated per month or the lump sum amount divided into 12 months.
Similarly, leave travel concession (LTC) of one month’s minimum pay with a maximum ceiling of Nu 15,000 per annum will be prorated per month.
The Bill proposed a pay structure consisting of the fixed pay and variable pay.
The fixed pay comprises of monthly basic pay applied for calculation of post service benefits and other computations currently pegged to the basic pay, non-pensionable monthly pay that includes existing allowances applicable across the board- HRA, and CA.
The variable pay comprises of monthly variable compensation (MVC) which includes cash equivalent of allowances and performance-based incentives (PBI).
The MVC includes leave encashment, leave travel concession, professional, uniform, night duty, difficult area, high altitude, overtime, foreign service, contract allowance, and radiation allowance for civil servants.
For MPs and constitutional post holders, it includes leave encashment, leave travel concession, domestic help, water and electricity, driver and fuel, vehicle purchase, discretionary, difficult area, overtime, high altitude and special responsibility
Lyonpo said that while reviewing the pay reform, the Pay Commission, which was established on October 19, considered rising import, appreciating USD to Ngultrum, minimal domestic revenue, and delay in hydroprojects.
Lyonpo added that the fourth pay revision in 2019 accounted for Nu 4.5 billion (B) in salary and allowances annually. It was 60 percent of the recurrent expenditure.
He added that in fiscal year 2020-21, Nu 32B was spent on the mandatory expenses, majority being pay and allowances of the country’s total domestic revenue of Nu 36B.
Lyonpo said that Nu 33B was spent on mandatory expenses with most in pay from the total domestic revenue of Nu 37B in fiscal year 2022-23.
In the last two plans, he said that the country’s recurrent expenditure was higher than the capital expenditure.
Opposition Leader Dorji Wangdi asked whether the pay revision was borrowed from other countries and whether its impact on the private sector was studied carefully.
Lyonpo said that developed countries spend an average of 5 percent of the gross domestic product (GDP) for the pay while Bhutan spends 7 percent to 8 percent of the GDP for pay.
On inflation, he said that the economic affairs and finance ministries would monitor if the businesses hike prices of the goods in the market including house rent.
The Bill was referred to the Economic and Finance Committee as a money Bill for further review and consultation.
The third reading will be on November 22 and 23.
Performance-based Incentives (PBI)
The PBI will be provided after the Royal Civil Service Commission’s performance management system is implemented.
“The performance-based incentive, comprising components that are linked to national, organisational and individual performances, could be up to 100 percent of the annual basic pay of the public servant’s pay to drive meritocracy and to pay competitive salary packages,” the Bill states.
Lyonpo said that PBI is based on the capability and competence to retain the expertise.
Allowance and benefits to discontinue
The Bill proposes to do away with vehicle import quota or monetised amount of Nu 1.5 million (M) and Nu 0.25M for all public servants.
However, the public servants who are eligible for the vehicle import quota will be retained until the effective date of the Act.
The practice of personal pay will be discontinued, according to the Bill. Personal pay, a one-time increment, is given to a performing civil servant if he or she has already reached the maximum pay scale. However, the amount received as personal pay shall be subsumed in the MVC under variable pay.
The Bill proposes to discontinue the red kabney (Nyie-kel-ma) allowance of Nu 100 per month. Dzongdag’s discretionary allowance of Nu 75, 000 per year will be discontinued.
The daily subsistence allowance of Nu 2,000 per day for in-country training shall be discontinued. However, wherever applicable, the travel allowance and daily allowance for in-country travel shall be eligible.
The Bill proposes the discontinuation of the Patang allowance of Nu 50,000.
The Bill also proposes discontinuation of the overtime session allowance for National Assembly, National Council and Department of National Budget of Nu 15,000 and Nu 5,000 per session.
There could also be discontinuation of officiating allowance of Nu 5,000 per month with a maximum ceiling of three months and cash handling allowance of Nu 400. Also, the Bill proposes discontinuation of sitting fees for the local government officials.
The additional allowance for teachers based on the government-approved Professional Standards for Teachers at proficient teacher (10 percent), accomplished teacher (15 percent), and distinguished teacher (20 percent) is also recommended to be discontinued.
The Bill proposes discontinuation of representational grant to individual foreign service members on a monthly basis under foreign service entitlements and discontinuation of the existing practice of actual baggage allowance of 250 kgs or 100 kgs as applicable on transfer from headquarters to mission or vice versa or mission to mission.
The salary revision will come into force with effect from July 1 next year for the civil and public servants.
For National Council and National Assembly members, the Act will come into force with the election of the members for the fourth parliament.