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No indication on corporate salary raise

Pay: More than six months after salaries for civil servants were revised, pay raise for corporate employees is unlikely to come anytime soon.

The finance ministry has not decided anything on the corporate salary raise. Finance secretary, Lam Dorji said the ministry has to propose the revision, which would be put up to the Cabinet for approval.

“But, as of now the ministry has not decided anything,” he said.

The norm in the past was that the finance ministry either proposed the raise or issued a guideline to determine the raise.

During a meet-the-press session in October last year, lyonchhoen Tshering Tobgay said that the government will not interfere and that it does not have unilateral authority to increase salaries and allowance.

He also said that in earlier revisions, salaries of corporate employees are maintained 15 percent higher than civil servants’. “But bottom line now is how much the companies can afford,” he had said then.

For the companies that are subsidised, lyonchhoen said the companies have to justify the subsidy thoroughly to the government.

But this, some said, was not reasonable because some companies like Druk Green Power Corporation can afford a bigger raise while some may not even be able to  afford a raise.

However, the Druk Holding and Investments (DHI) has already formed a committee to study the raise based on the inflation rate and corresponding erosion in purchasing power of Ngultrum.

Sources said that the committee’s report would be submitted to the board this month for approval.  The report would then be sent to Cabinet for final approval.

The total pay and allowances of 10 state-owned corporations amounted to Nu 478.530M, constituting  about 16 percent of their annual gross revenues. Should the pay and allowances of state-owned enterprises (SOE) be maintained at 15 percent higher than the civil servants’, the proposed increase will translate into an additional Nu 71.78M.

According to the second pay commission’s report, published in March last year, considering the performance and expenditure growth in the past five years of the SOEs, the gross revenue would be sufficient to meet the 15 percent increase in their pay and allowances, except for Wood Craft Center, Bhutan Post, and Bhutan Broadcasting Service.

Going by past trends, in January 2011 civil servants got a 20 percent raise on the salary scale of 2006. In December the same year, a 15 percent pay hike, with an additional 20 percent corporate allowance was approved for the corporations. The revision however was applied retroactively from July, meaning some 10,000 employees claimed their arrears for six months.

State-owned corporations then included Bhutan Agro, Bhutan Broadcasting Service, Bhutan Development Bank, Bhutan Post, Construction Development Corporation, Food Corporation of Bhutan, Kuensel Corporation, National Housing Development Corporation, National Pension and Provident Fund and Wood Craft Center.

But Wood Craft Center and the Construction Development Corporation were handed over to DHI last month.

Earlier, the companies could decide on their own should they wish to go lower than the percent the government prescribed. But most companies were able to manage the raise.

Again in 2009, following the 35 percent revision in civil servant’s salary, the finance ministry came out with a broad guideline to revise the salary of corporate employees.

It has prescribed two different pay structures for corporations based on their capital base and revenue generation. Companies with equity base of more than Nu 100M and earning revenues of more than Nu 500M per annum are put in one category and the rest of the companies in another category.  Further, the revision was based on the grade of individual employees.

However, all corporations were eligible for the 15 percent Corporate Specific Allowance (CSA) on the revised pay structure. This revision was also approved six months since the civil servants were given the pay raise but again was applied retroactively.

While there are companies who can afford the raise, there are also a few others, which are sustaining on government subsidies and a raise could harm the government coffer.

By Tshering Dorji

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