What happens after a pay revision that by January 2020 will cover about 40,000 salaried people in the civil service and the corporations?

Even as finance officers sit down to work on the details, many state-owned corporations are beginning to feel the heat.

There is no denying that employees need a revision. The cost of sustenance, especially in urban Bhutan, has surpassed the figures the revision will bring. For instance, the average house rent in the capital is about Nu 10,000. Everybody is on the hunt for cheaper housing.

There will be implication on the government and the state-owned enterprises from the revision, which will come into effect by the end of the month. The government will have to churn out more revenue to fund the revision for SOEs that are totally dependent on the state.

Cost will come from the 20 percent housing allowance, the increased travel and daily allowance, and the performance-based variable incentive, although many feel that the current raise is not going to make a difference.

Those who are sustaining will have to fine-tune their business modalities and make enough to fill the huge gap created by the revision. Some will have no dividends to declare as the cost of the revision will eat into the profit margin.

The PBVI, which is already implemented in some  companies, seems to be the driving factor in the SOEs. Incentives will depend on performance. This should drive performance. But, the big question is how do we drive performance?

SOEs should be governed by sound corporate governance strategies. The bottleneck is in our culture. Not to deride the government agencies, but our enterprises are run like government agencies. Whether you perform or not, whether you work or bask in the sun, everybody gets a monthly salary and yearly bonuses, on time.

Salaries, as we believe, should be pegged to jobs and responsibilities and not to people or the number of years they served, in other words, seniority.  The biggest challenge in many companies is that we cannot shake things up easily. In the private sector, you perform or you are fired.

The Kidu nature in our companies is hampering growth or performance. We get involved in qualifications, capability, seniority, sometimes even relationships and, therefore complicate our system and performance.

Those in the private sector say that if SOEs are run like private companies, both the government and the economy would benefit from improved performance and revenue.

With the current revision, there will be a few thousands more to spend when taken at an individual level. Any pay revision raises expectations but always fall short of satisfying all.

Meanwhile, the immediate impact is on the cost of living.

There is a fear that there will be increase in house rent, price of essentials even with the government pleading to not to do so after the salary revision.

This had been the trend every time the government has initiated a salary revision.

Most important question of all, what difference would a pay revision bring?