Bhutan govt’s pay raise proposal will aggravate inequity: Opposition

THIMPHU (Kuensel/ANN) - Bhutan government’s recommendation on the pay revision means higher risks, spreads inequity, and risks widening the gap.

The government’s recommendation on the pay revision means higher risks than return, spreads inequity, and risks widening the gap, according to a press release from the Opposition. 

The Opposition raised seven observations on the government’s pay revision report. While the pay raise is negligible, the Opposition said that it proliferates the allowance system, poses high public finance risks, aggravates imprudent expenditure stunting economic growth, and risks general morale loss and higher corruption in public service.  

The proposed pay raise of 6-35 percent with a higher percentage to the lower rung accounts from the highest raise in absolute terms to Prime Minister at Nu 10,800 to the lowest to ESP at Nu 1,463. 

The Pay Commission has affirmed the erosion of income by 20.9 percent due to inflation since the last raise in 2014 to 2019. “Factoring in the erosion, pay raise in most categories even do not compensate the erosion while some lower categories gain marginally but very dismal.” 

The party claimed that the first government revised the pay by 40-77 percent, the second government by 20-40 percent, and the 12-35 percent raise by the third government remains the lowest.

The Opposition claimed that the government’s proposal contradicts its key pledge to narrow the gap. 

While in terms of percentage, the raise is higher at the lower categories and lower at the higher categories; in terms of absolute amount the raise is higher at higher categories and vice versa. Prime Minister receives the highest raise of Nu 10,800 while those at O4 receive the lowest raise of Nu 2045, the party stated.

“The analysis of incremental difference between two immediate levels of public servants also shows a clear trend of higher raise at the higher levels. The difference rises sharply and disproportionately between constitutional heads and Cabinet Members, at Nu 53,620 and Nu 106,620 between Constitutional office heads and Prime Minister.”

The opposition’s analysis of trend of pay raise between the lowest and highest public servants also show sudden widening of pay gap after the pay raise in 2014 and the trend continues, although with some improvement, in the current proposal.  “Compression ratio has increased from 16 in 2009 to 26 in 2014 and will remain at 20 with the present raise,” it states.

The party also claims that the pay raise proposal will aggravate inequity in the public service as well as society at large among regular and contract employees, and the public and corporate and private sectors. 

It states that the current pay revision proposal is less of the pay raise and more of an allowance proliferation proposal. “But the current proposal opens a Pandora’s Box for all sorts of allowances. In the process, it omits allowances for various groups, jobs and positions with the same or even higher degree of difficulty, risks and importance.”

The government’s proposal also has huge financial risks to the state, it states. The total financial implication of the Pay Commission’s proposal was Nu 4.238 billion annually, which is now increased to Nu 4.530 billion following revision by the government. However, the opposition notes that this still excludes capitation fees, subsidies, stipends and transfers, which will also be drawn from the Consolidated Fund for salaries, allowances and other emoluments for other public servants. “The actual financial implication in five years is expected to be much higher by about additional Nu 2 billion.”

It says that the government relies solely on revenue from the Mangdechu hydropower project and there was no plan to generate revenue from additional taxes or other forms. This puts huge risk to national public finance stability and could put the country to borrow more, it states. 

With the Pay Revision estimated to cost additional Nu 4.530B, it would substantially increase the share of recurrent expenditure and conversely, decrease the share of capital expenditure. “This is a clear signal of an imprudent, inefficient and unsustainable public finance expenditure policy. This will further curtail investment, growth and job creation in the economy.”

The investment trend shows volatility both in government and private investments with government investment dropping 9.5 percent in 2017-18 and expected to drop further by 25.7 percent in 2018-19. “The Pay Revision puts public expenditure system and economy at high risk of stunting and jobless economy,” it states. “It risks loss of morale in public service on the whole and inevitably lead to more corruption as well.”

Recommendations

The Opposition recommends the pay revision to give reasonable upfront raise and equity of pay and allowances across the entire public service. 

The main reason for proposing no raise to the prime minister and ministers, it states, is owing to their pay having gone disproportionately high compared to immediate lower brackets after the raise in 2014. 

“We have also noted that the Government’s current proposal deviates substantially from the Pay Commission’s proposal, which brings a serious question of professionalism, objectivity and credibility of the Report apart from the respect for core mandate and purpose of the Pay Commission,” the press release state.

The opposition has recommended that the prime minister, ministers and other equivalent post holders to not take the raise; a reduced raise by two to 10 percent for MPs, attorney general, holders/ members/ commissioners of Constitutional offices, and cabinet and government secretaries. 

It also recommended reducing the raise for executive specialist categories to 12 from 14 percent. The party accepted the government’s proposed raise for civil servants in the professional category, which comprise the largest chunk of civil servants (47 percent), and the supporting cadres.

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