Cabinet approves bigger pay hike for junior public servants

Mileage to not go down, Red Kabney allowance removed, Vehicle quota monetization looked at

After gathering extensive feedback from the public, media, social media, its MPs, other political parties and other stakeholders the Cabinet’s version of the Pay Commission recommendation has a much bigger hike for junior and mid-level civil and public servants.

A reliable source in the government said that there will be a major percentage hike for the lower and mid-level civil and public servants.

The hike at the lowest levels will be well above what was earlier proposed taking them close to the DNT’s commitment of a minimum wage of around Nu 450 a day which is around nu 13,500 to Nu 14,000 per month.

Similarly, the pay percentages at the O level, S level and P level have also been accordingly adjusted giving higher percentages but with much higher percentages for the lower levels. There is a smaller hike at the higher levels.

The original pay commission recommendation at the ESP level was 29 percent coming to around Nu 9,000-11,700 and 23 percent for GSP coming to around 9,465-12,315.

At the O level it was 21 percent, 18 percent at the S level, 16 percent at the P and SS4-1level, 15 percent at the Executive and Specialists level and 14 percent for secretaries, MPs, Ministers and Constitutional posts.

The cabinet examined the idea of giving lump-sum amounts based on the views of some ministers, but the idea was dropped after it was not found to be feasible and too expensive.

There was also a danger of then doing the opposite of disappointing senior civil servants who would be equated to junior civil servants.

A big question would be how the government can afford to give higher percentage hikes given the limited resources.

Here, it has been learnt that with the government not implementing the Performance Based Incentive (PBI), Nu 881.38 mn has been freed up. This amount is around 20 percent of the total salary hike amount of Nu 4.238 bn per year.

In addition to this the annual budget document for 2019-20 shows that the final amount allocated for the hike is Nu 4.530 bn per year which is an addition of another Nu 292 mn a year.

This means that the cabinet has an additional total amount of Nu 1.173 bn to reallocate as pay hikes and allowances.

Also, contrary to some speculation that ministers and MPs are not taking a hike, they will be taking a hike though it will be a minimal one in terms of percentage.

The argument here seems to be that the pay commission report should not be taken as an opportunity for political grand-standing, otherwise it would impact the pay of ministers and MPs in the longer run.

Another consideration for taking a hike was inflation and expenditure that MPs and Ministers have to make in keeping with their posts.

In terms of the vehicle quota, it is already too late for MPs since most have already taken the ‘Prado Quota’ so it will be kept at status quo for now.

However, for civil servants the cabinet may give the option of monetizing the vehicle quota. The Pay Commission recommended monetizing the vehicle quota at Nu 250,000 per quota for vehicle quota limits of Nu 800,000.

At the same time there will be steps around the possible monetization of the vehicle quota to save tax revenue.

Importantly, one controversial part of the pay commission recommendation is to reduce the mileage from Nu 16 per km to nu 10 per km.

According to another source, the Cabinet has agreed to not reduce the mileage by such a drastic amount and it will be kept similar to the current rate though the exact figure is not available.

The Red Kabney allowance which was recommended to be increased to Nu 10,000 a month from the current Nu 100 a month will be kept as it is with no deviation.

The Cabinet decided this as it was felt that the Red Kabney is an honor and prerogative granted by His Majesty The King and it would not be correct for the government to attach a direct monetary value to it.

The issue that also came into consideration was the fact that His Majesty also awards other prizes and the government should not attach any monetary value to them.

The Cabinet currently has only one Red Scarf holder in the form of the Home Minister and it is learnt that feedback was sought from him on the matter too.

The decision was also based mainly on the public outrage over the monetization of an honor and the amount.

It was felt that the amount would generate hostility towards Red-Scarf officers instead of enhancing their prestige.

An important feature of the cabinet’s final decision is that it has learned lessons from the controversies generated in the last pay hike in 2014 and the subsequent political backlash faced by the PDP from the public servants.

Given that the the final pay hike report is coming as a Money Bill the government also wants to avoid any unpleasant surprises on the floor of the National Assembly so the cabinet has been actively consulting its own MPs.

One major recommendation and concern from the DNT MPs is that the government should fulfill its campaign pledge and give a higher hike for lower level civil servants.

It has been learnt that the Opposition Party is already coming up with its own set of recommendations or an alternate pay report when the government’s report is presented on 7th June.

The National Council wants the Pay Commission recommendations to come as a report so that it can make its own recommendations and discuss the report otherwise a money bill would limit the NC’s options.

The NA Speaker Tshogpon Wangchuk Namgyel has the final say. According to sources, the Speaker has decided to introduce it as a Money Bill given that it is a large amount that is withdrawn from the Consolidated Fund and also given the past precedent of bringing it in as a Money Bill. The Speaker has also decided that it would be in keeping with the Constitution.

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