15 to 50% Performance Incentive for SOEs to be calculated based on Compact with MoF

Revised pay for SOEs to be implemented from 1st December

A major feature of the State Owned Enterprises (SOEs) pay hike is a Performances Based Variable Incentive (PBVI) allowance to encourage better performance by SOE companies.

The PBVI for companies range from 15 percent for underperformance, 25 percent for good performance, 35 percent for very good performance and 50 percent for excellent performance.

“15 percent PBVI for underperformance is additional to SOEs, which civil servant won’t be getting. This performance rating is independent of the financial performance by the SEOs,” the Finance Minister Lyonpo Namgay Tshering said.

CEO and even contract employees will be getting PBVI. The performance will not just be financial but also based on social mandates as some companies have more revenue than others.

The point to rate under PBVI will be derived from the Compact Agreement which will be signed between the board of the SOEs and the Ministry of Finance.

Right now there is no compact but the MoF will come up with one.

“We have introduced this Performance Variable Based Incentive (PVBI) and we are working on the criteria of how the scoring has to take place,” said Lyonpo adding that the Compact will be the basis of the scoring.

The Finance Minister clarified that the PBVI will be applied organizationally and the rating will be based on an annual basis. So if a company has very good performance then its employees can look forward to a 25 percent PBVI paid on a monthly basis.

The Finance Minister also said that the apart from the salary hike the SOE employees would also get a hike in Provident Fund from 11 to 15 percent which means that the state will contribute four percent more like in the case of civil servants.

The minister said the pay revision of the State Owned Enterprises (SOEs) was approved by the Cabinet after much research and numerous meetings in the finance ministry.

The recommendations were submitted to the Cabinet twice, and accordingly a decision was made to keep the basic salary raise the same for both the civil servant and public servant, to avoid distortion in the pay raise.

Lyonpo said SOEs employees get 7 to 8 percent more in basic salary than what civil servants get. Therefore, SOEs employees will be getting more than civil servants.

In addition, he said that as per their assumption today, the pay raise of the public servants comes to 10 to 15 percent higher than the general civil servants. “We have come up with a major change where the salary raise is pegged with what the civil servants raise was approved by the government, that is basically from 6 percent to 35 percent,” he added.

The other major change is to do away with the position specific allowances and companies specific allowances. Until now, some of the SOEs paid position specific allowances as per the current salary structure in SOEs.

In addition, some companies used to get company specific allowances that were mainly tagged to the profit made by the company. So the companies with social mandates, who are not making profit, were actually not getting that, the minister said.

“Therefore, we felt that a position specific allowances and companies specific allowance was not needed, and thereby, we have discussed to be fair and give everything equally. The government agreed to it as well,” Lyonpo said.

Lyonpo said that in terms of corporate allowances, until now, all SOEs used to get 25 percent as corporate allowance and the corporate allowances were given in lieu of house rental allowances. Therefore, the corporate allowance is removed, and and there is now a 20 percent house rent allowances.

He said the PBVI is in lieu of corporate allowance.

Lyonpo said, “Now with the new raise, the SEO company employees will get 10 to 15 percent more than the general civil servants. However, the general civil servant is exclusive the pay raise provided to health workers and teachers.”

The DHI pay-hike will be decided separately by its board by the first week of December.

The Cabinet has finalized the pay revision for SOEs, which include FCB, Kuensel, NPPF, Bhutan Post, Bhutan Agro, NHDCL, BBS, Bhutan Livestock Development Corporation, Bhutan Lottery, Bhutan Duty Free, RBHSL, Farm Machinery Corp, Green Bhutan Corp, BDBL, Rural Enterprise Development Corp, Financial Institutions Training Institute, AWP, Credit Information Bureau and Menjongsorig Pharma.

The pay raise comes in effect from 1st December 2019 which led to some unhappiness from SOE employees who had hoped for arrears from July.

For SOEs who can’t afford any of the above due to their social mandates the government will give a subsidy for them.

Lyonpo giving the example of Bhutan Livestock Corporation said it is complementing and supplementing the works done by the Ministry of Agriculture.

“If we divert them into a profit making position they wont be able to cater to the social mandates but we want to balance it and if they cannot meet recurrent expenditures the government will inject the subsidy into those companies,” said Lyonpo.

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