A cozy but bloated club

There is no other topic in Bhutan that provokes as heated a discussion and passionate feelings than the pay hike for government employees.

The arguments are usually over the high and low percentages and who is getting how much and why, but very few question the legitimacy or the impact of such a hike being given to around 24,000 civil servants including politicians.

However, the latest pay hike comes in a context of a still ailing economy where many private companies and businesses are closing down or suffering, people are losing jobs and supply of money is tight with the financial institutions.

The pay hike is also confusing as it flies in the face of the government’s ‘austerity measures’ where even the cheltrums are not being spared and a lot of symbolic gestures were made by senior leaders.

Importantly, there is little to show in terms of government’s service delivery and productivity that our public servants deserve such a generous hike, especially in such difficult times.

The reality is that our civil service is bloated beyond its actual needs and with public service standards that are not improving or even falling below standard.

While it is both populist and easy to target just elected leaders and their hikes, the time has come to question the entire government and public servants as a whole – whether they are politicians or bureaucrats.

Despite the introduction of democracy in 2008, the public servants including politicians have not given up their sense of entitlement and a mentality that it is only them serving the nation.

Having made themselves the first among equals in Bhutan, they have also decided that they should get the major share of the pie – even if it is to the detriment of other sectors like the private sector and other unorganized sectors.

The whole pay hike issue emerged out of the competitive politics of 2013 – where almost every party promised a hike of some kind. The new government once elected had three options in either fulfilling a very expensive election promise, waiting it out till the economy improved or not giving the hike at all.

Of the three options, the first would have been populist, the second realistic and third would have invited stinging criticisms of broken promises by the government’s critics. It is now clear that the government has decided to go with the first option.

There is no doubt that civil servants who are the mechanism of service delivery should be paid a decent wage which should not be far behind inflation, but the problem – as with any bureaucracy is when the machine starts consuming more fuel than its actual output.

The service standards of this same machinery is also not up to the mark as it will be verified by many citizens encountering rude, unhelpful, protocol sensitive, slow moving and insensitive public servants.

The fact that the hike will be financed in a large part by tax revenues from the private sector and private citizens is a matter of concern, especially when the private sector is still suffering.

The civil servants due to their job security and steady salary and benefits are well insulated from the rupee and credit crunch that hit Bhutan from late 2011 onwards. On the other hand, the vast majority of those in the private sector and unorganized sectors were most badly hit with the economic crisis.

While examining the cause of the crisis, several studies show that the government expenditure, especially in the form of pay hikes, had played a major role in the rupee and credit crunch.

The pay hike will also do much to increase inflation and make the lives of people in the private sector and those outside the government largess even more difficult.

Among elected leaders like, the ministers, the logic for their higher than usual hike seems to be convincing in part only. They have also trapped themselves by first going out for a merciless austerity measures (causing further constriction to the economy) and are now doing the exact opposite when it comes to the pay revision.

Commenting purely on the structure of the pay hike, there can be no doubt that the biggest beneficiaries would be the elected leaders, but at the same time, as far as the civil service is concerned, it is more fair in that the lower rung of the service have been given higher hikes than senior bureaucrats.

The overall feeling from this pay hike is that it has been badly timed when the economy is still in the doldrums, there is a degree of policy confusion over it as far as the austerity measures is concerned, and it will negatively impact the private and unorganized sector.

Bhutan’s biggest old boys’ club is as cozy as ever, and a lot more bloated as well.

“I predict future happiness for Americans, if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

Thomas Jefferson