Salary revision outpaces revenue generation

The annual average salary of a civil servant is about 51 percent higher than a private employee’s

RCSC: About 25 percent of the country’s annual revenue is spent on paying civil servants. The annual salary of civil servants has more than doubled from 2008 to 2014, according to figures with the Royal Civil Service Commission (RCSC).

The government last year paid civil servants approximately Nu 5.99 billion (B) as annual salary, an increase from Nu 2.8B from 2008. Until July last year, the civil service’s strength was 25,301.

Civil servants’ salaries have been revised thrice since the last government took office. However, the growth in the salaries has outpaced the rise in the country’s domestic revenue.

While the annual salary increased 113 percent during the period, domestic revenue increased by 88 percent only. The annual revenue reached Nu 23.24B last year from Nu 12.34B six years ago, according to the national budget report.

The RCSC’s annual report 2014 states, “Attracting, retaining and motivating the best and the brightest in the civil service, the backbone of good governance, rely to a great degree on pay and benefits.” The commission states it plays no role in deciding salaries of civil servants but is concerned about the pay and benefits, and in particular, the structure of the civil service system.

The commission also believes that establishing a good and competitive salary structure in the civil service is fundamental to attracting the best and brightest and to enhance productivity and motivate the civil servants.

The commission’s comparison of the average salary of a civil servant to a private sector employee reveals that the annual average salary of a civil servant is Nu 236,757, about 51 percent higher than a private employee’s. Due to lack of data of the whole private sector employees, the calculation is based on the pay scale of Tashi Commercial Corporation Ltd employees.

The private corporation disburses Nu 9.318M monthly as salaries to its 717 employees. This means that a private sector employee’s annual salary is estimated to be Nu 155,956.

Civil servants constitute 3.53 percent of the country’s total population as of December last year. This means there is one civil servant for every 28 people.

According to the report, one of the indicators of a good and appropriate salary system in the civil service is the attrition rates and trends.

Through extensive rationalisation of both domestic revenues and current expenditures as projected in the 11th Plan, the second pay commission report stated that sufficient fiscal space was created for a pay revision to cover at least the income erosion since the last salary revision, which was in the form of a lump sum salary allowance that became effective January 2011.

It noted that the country was going through unprecedented inflation levels over the last couple of years and that real income of the civil service has been eroded by 20.1 percent since 2011.

The highest salary of a civil servant today is Nu 70,925 and the lowest is Nu 8,505.

MB Subba

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