Draft Clean Wage Document proposes Nu 8,000 to Nu 1,000 hike for CS

A leaked copy of a draft Clean Wage Document sent by the Ministry of Finance (MoF) to the Ministry of Education (MoE) in April 2022 gives an idea of what the 5th Pay Commission is working on as part of the Clean Wage reforms for the civil service.

A recent press release from the 5th Pay Commission confirmed this draft document to be true as it was leaked when the MoF shared it with the MoE.

It says paying public servants a Clean Wage means that they will get a salary package without fringe benefits.

The document keeps the current basic pay as it is but on the allowances front there are major changes.

The allowances that are proposed to be removed are officiating allowance, one-time session overtime allowance for National Assembly, National Council and Ministry of Finance staff, radiation allowance, cash handling allowance, personalized pay and cash handling allowance.

It also proposes to remove the annual discretionary allowance which is Nu 300,000 for the PM, Nu 200,000 for Ministers, Speaker, Opposition Leader, National Council Chairman and Chief Justice and Nu 150,000 for MPs.

The other privileges to also be removed are Duty free quota for officers, vehicle import quota, in country training DSA and annual increment.

The document says these allowances do not have a direct bearing or a negative effect on the efficiency and efficacy of public servants’ ability to discharge his duties and are hence being removed.

However, before Civil Servants complain there is actually a net gain as the remaining allowances that will be subsumed under Variable Pay is higher than the allowances before in terms of the total amount and this is where the hike will happen.

The allowances subsumed under the variable pay are House Rent, Communication, Leave Travel Concession and Leave Encashment.

Earlier Leave Encashment was equivalent to the basic pay and could be claimed based on the paid leave not taken but now it will anyhow be given on a monthly basis by dividing 30 days among 12 months.

Similarly, the LTC will also be given on a monthly basis.

The professional allowance for doctors, nurses, clinicians; uniform allowance and prosecutors will be the same while professional allowance for aviation, ACC officials and Auditors will be targeted.

This means that the Cabinet Secretary and Government Secretaries are proposed to get  Nu 8,000 hike in allowance, Ex 1/Es 1 will get around 7,000 hike, Ex 2/Es 2 around 6,000 hike, Ex 3/Es 3 and P 1 around 5,000 hike, then P 2/SS1 and P 3/SS2 to get Nu 4,000 hike and P 4/SS3 and P 5/SS4 to get around 3,000 hike. 

In the case of teachers, the proposed hike in variable pay is not much and kept at around Nu 1,000.

The allowances which are retained as it is with no changes are Red Kabney, Patang, High Altitude, Difficulty, Overtime, Night Duty, Foreign Service and professional teaching allowance.

The post retirement benefits like pension, provident fund and gratuity will remain the same.

Designated duty vehicles will be retained along with training stipends for pre and in service officers, and for officers who travel there will be ex-country DSA, carriage charges during transfer or retirement, transfer grant and porter pony charges.

This group of allowances are retained as they are not tied to jobs or grades but to specific circumstances, but officers will not get these allowances once those circumstances are not applicable to the officer.

The TA/DA, mileage and contract allowances will be retained, but with changes.

The document points out certain realities and flaws of the current pay system.

It says there are 25 types of cash or in-kind allowances and a complex system of non-taxable allowances, some of which are discretionary prevents public service from being transparent and accountable to the public for its expenditures.

So the equivalent monetary value of what public servants eventually get is considerably more than what is reflected in their pay slip.

It says the allowances drives public servants to game the system to derive maximum benefits made worse by low salaries.

It makes them more susceptible to unethical or worse corrupt practices, undermining efforts to eradicate systemic corruption.

The document says the absence of a robust performance management system and narrow salary bandwidth is challenging to sharpen the pay differential between a performer and non-performer.

It says the complex system of allowances leads to higher overheads and also a bloated public service.

Looking at the allowances in the Financial Year 2019-20 and 2020-21 the average money spent on allowances is around Nu 6.6 billion (bn) every year.

The estimated monetary value of a public servant’s total allowances as a percentage of gross pay is 50% to 120%.

The document gives examples of how the system is gamed in terms of fake table tours, additional TA/DA claim and drivers colluding with workshops and fuel depots.

The benefits of the Clean Wage system have also been listed.

One is that it increases accountability and transparency as what the civil service pays civil servants in cash wages will be largely what is spent on pay packages.

It will minimize gaming in the system and unethical practices and wastage of resources and reduces administrative burden.

It also paves the way for civil servants to do what they were employed to do so.

The Clean Wage would be the foundation of the performance management system as the wider salary bands would pave the way forward for the civil service to put in place robust individual and even national performance bonus systems.

This would drive systemic accountability by differentiating the good performers and the underperforming ones.

Clean Wage would also be the foundation for a talent attraction system whereby paying more competitive wages would incentivize deserving private sector talent to join, bringing their expertise to the system.

It says talented former civil servants who had left the system could be incentivized to rejoin the civil service at different levels of seniority, and contribute at the higher level. This would be possible by amending the RCSC rules.

The Clean Wage System is supposed to have three phases.

Phase 1 would be rolling out clean wage system, removing outdated allowances, while subsuming relevant ones in variable pay, retaining only a minimal basket of allowances.

This phase will also prepare civil servants to roll out phases 2 and 3. These will include policy reviews, and internal communications to pave the way for implementation of new initiatives. 

Phase 2 will have a new TA/DA and part-time scheme.

Phase two will exit all in house drivers from the civil service, remove office cars, do away with the system of of traveling in private cars and claiming mileage.

Such services should be outsourced and there should be utilization tracking through digital means and expenditure would be hard-capped.

The part time scheme will be rolled out to attract and retain talent who are unable to work full-time.

Phase 3 will have performance management incentives. It will build on the clean wage system and reduce fixed cash wage component and introduce individual, organization, and national level bonus systems to differentiate the good performers from the underperforming ones.

18,431 general civil servants, 8,605 teachers, 470 doctors, 3,569 clinicians and nurses, 507 Auditors, ACC, OAG and 13 Aviation officials will all come under the clean wage system.

While the 5th Pay Commission will be examining this document the final outcome is not yet known and may undergo changes with possible changes even at the cabinet level.

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