Finance minister clarifies SOE salary revision confusion
The salary revision for state-owned enterprises (SOE) is between 6 and 35 percent that will come with a Performance Based Variable Incentive (PBVI) between 15 and 50 percent, instead of the 25 percent corporate allowance, and housing allowance of 20 percent.
The finance ministry yesterday issued a notification on the SOE salary revision clarifying the confusions.
No annual bonuses would be paid. “Corporate allowance is not replaced by the house rent allowance but PBVI,” finance minister Namgay Tshering said adding that house rent allowance is an additional incentive. The difference is that corporate allowances and bonuses are now pegged with the performances of the SOEs.
If the SOEs’ performances are evaluated as ‘excellent’ the PBVI payout is 50 percent of the basic salary. A performance rated “very good” would amount to a PBVI of 35 percent, 25 percent for “good” and 15 percent for “satisfactory”.
The discretion to implement the PBVI is left to the board. “The government doesn’t want to impose financial burden on the SOEs and it also understands that all SOEs do not enjoy same kind of financial stability,” Lyonpo said.
However a robust mechanism to evaluate the performances of SOEs would be instituted.
The PBVI, if boards of respective companies opt to go monthly, the basis of calculation will depend on the annual performance achievements of individual companies. The rating of preceding year will serve as the basis for PBVI for the coming year.
For instance, if a company achieves “very good” in 2020, this amounts to a 35 percent PBVI. In the following year (2021), its employees would be paid 35 percent PBVI on the new basic pay every month, excluding the 20 percent house rent allowance.
Should the board of a company decide to reward the PBVI on annual basis, the PBVI payout would be calculated for the 12-month period and paid in one go at the end of the year.
Lyonpo Namgay Tshering said that the board of individual companies would have to assess the impact based on their affordability. “The government would ensure that only deserving companies would get good ratings, not just based on financial performance but also on the social aspects,” he said.
A clarification from the Prime Minister’s office stated that PBVI payout, if slated for monthly basis would ensure employees drawing additional pay until the next evaluation while annual payout can also prove beneficial for some companies.
However, the notification stated that all employees of SOEs shall be granted with 15 percent PBVI for 2019, which implies that SOEs can either choose to provide 15 percent PBVI every month for the whole 2020 or provide the amount in one go by the end of this year.
In effect, Lyonpo said that salaries of the SOEs would turn out to be 40 percent higher than the existing salaries of the DHI companies. “Once incorporated under the companies Act, SOEs and DHI companies should perform at par,” Lyonpo Namgay Tshering said adding that the DHI pay revision would depend on the their board decision, including the corporate allowances. “But a 40 percent hike cannot be expected,” he said.
Albeit the uniformity the government is trying to bring about, Lyonpo said that lump sum allowances like communication, cash handling and incentives granted for specialised skills would have to be formalised.
For instance, he said that the government was not aware of allowances such as tea allowances, fuel allowances, internal audit allowances and entertainment among others. These kind of allowances, Lyonpo Namgay Tshering, said was mutually agreed, ancillary allowances and internally decided between the board and the management, especially in case of Bhutan Development Bank. “The government is not aware of such arrangement and because of this people perceive a downward revision,” he said. “It is the duty of the government to formalise all kinds of allowances because it is unfair to other SOEs. A downward revision would never happen.”
The notification, however, specifically mentions that employees of Bhutan Development Bank and CSI Bank are entitled to 10 percent banking allowance.
The contract allowances of CEOs will be maintained the same. The CEOs of the SOE are entitled to 6 percent revision, contract allowance and PBVI, which even the contract employees are entitled to.
However, the CEOs of FCBL and CSI bank are entitled to a salary at par with CEOs of NPPF and BDBL, which comes to a minimum basic pay of Nu 85,500 a month. Other CEOs would draw a minimum basic pay of Nu 75,000 a month.
The DSA for both in country and ex-country travel for the employees of the SOEs will be maintained at par with civil service. The pension contribution of the SOEs (employers)shall be increased from 11 percent to 15 percent.