Committee studying a ‘Clean Wage’ system for Bhutan

As part of the larger reforms a committee in the Ministry of Finance is studying the concept of ‘Clean Wage,’ system that provides a comprehensive pay package free of allowances, both open and hidden.

The aim is to bring in transparency, motivate the civil servants and also change their behavior for the better.

As an example, currently civil servants get leave encashment pay, but the ground reality is that most civil servants encash this even if they go on leave.

So the money is anyhow leaving the exchequer and at the same time is not promoting ethical behavior among civil servants.

Under the clean wage system, this could be done away with and could instead be made part of the pay.

Another example is that civil servants get a vehicle quota of Nu 800,000 every seven years or they can encash it for Nu 250,000. Civil servants are not allowed to sell this quota, however, the ground reality again is that the quota is heavily sold and traded.

 The study is looking at doing away with this vehicle quota system and instead paying the monetized amount over a period of time as part of the civil servant’s clean wage.

Then there are the various complications around the house rent allowance with some getting housing and some not etc.

There again several types of different allowances in different segment of the civil service.

The clean wage study, if implemented, will mean more transparency, no hidden allowances and potentially a slightly higher pay.

The civil service system is littered with a variety of allowances like professional allowance for medical staff, Royal Audit Authority, Anti-Corruption Commission, Internal Auditors, Department of Civil Aviation and teachers allowance.

There is communication allowance for senior civil servants and politicians, and difficulty area allowance for those in difficult areas.

There are regular contract allowances, discretionary allowance, special responsibilities allowance, overtime allowance, duty free membership for senior officials, high altitude allowance, cash handling allowance, uniform allowance, night duty allowance, patang allowance, dancer allowance, prosecution allowance, Overtime Session Allowance (Parliament staff) and radiation allowance.

The best allowances are enjoyed by Ministers and Members of Parliament.

As per the 2019 Pay Revision Act the Prime Minister, Speaker, Cabinet Ministers, Opposition Leader Chief Justice of the Supreme Court get a two storey government bungalow or 30% of their pay.

A similar bungalow in the market rate may not come for anything less than Nu 50,000 these days.

A chauffer driven car, Nu 200,000 annual discretionary allowance (300,000 for PM), domestic help at ESP level pay of Nu 12,980, water and electric bills paid at the actual level, Nu 5,000 for telephone charges (actuals for PM) a Prado quota on completing the term or Nu 1.5 mn instead.

The MPs get 30 percent house rent allowance which is Nu 22,150, fuel allowance of 10,000 per month, driver allowance of 10,000, vehicle purchase amount of Nu 1 mn per term, Prado quota or Nu 1.5 mn instead per term, Nu 150,000 discretionary grant per year and Nu 2,000 in phone charges.

MPs get Nu 56,650 in just allowances apart from their basic pay of around Nu 80,000.

If the Clean Wage system is implemented in Bhutan it will be more transparent, more professional and will also remove the Thobthang culture.

The clean wage system is inspired by Singapore which gives a clean wage for all its politicians and civil servants.

This is one of the reasons why the salaries of Singaporean politicians and public officials can seem high as there are no hidden allowances like free housing, free utilities etc, but everything is calculated and give as part of a single salary system.

Singaporean politicians and civil servants are regarded as being among the most effective and productive in the world, if not the best.

In Singapore’s ‘Clean Wage’ policy civil servants are paid ‘all cash’ wages moving away from a wide variety of allowances, free housing, and offering free medical benefits. One initiative is the transfer from the Civil Service pension scheme to a national Central Provident Fund (CPF) scheme to avoid burden on future generations with an unsustainable pension scheme.

While Clean Wage is one of the key principles of the pay reforms in Singapore that have happened since the 1980’s onwards, there are also other principals.

In Singapore, the Civil Service pay system is comparable to the private sector to keep it competitive, there are annual salary reviews to identify salaries that need revision, wage structure for civil servants is made up of a number of components which can be adjusted based on the performance of the economy without affecting take home pay too adversely and there is performance bonus linked to individual performance.

For example, if the economy is not doing well then ministers can even end up taking a pay cut as a part of their pay is linked to the state of the economy, unemployment etc.

Educational qualifications remain an important factor in determining starting salaries and for entry into the Civil Service

The Civil Service there adopts a long term strategic view on pay administration matters to stem the outflow of good officers from the Civil Service and ensure stability and motivation of civil servants.

The ‘Clean Wage’ concept is being studied in the Ministry of Finance and so it is still at the draft stage. However, if it is introduced then it will have to come in the form of a Clean Wage Bill and cover everyone from Politicians to Civil Servants.

In Bhutan, currently the DHI main office pay system is the closest to a Clean Wage system.

There have been some growing rumors of a massive civil service pay hike coming in 2023, but a source said that there is no such plan as there is no adequate revenue or resources for any such hike.  

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