The Bhutanese Leading the way.
In Bhutan, few issues stir as much public interest and debate as civil service pay hikes. The history of such revisions reflects both our national aspirations and the limits of our fiscal realities.
In the past major hikes have often followed hydropower milestones like Chukha, Tala and Mangdechu.
Even the 2009 hike of 35 to 55 percent was cushioned by the earlier Tala revenue, while 2014 saw a 19 to 25 percent increase. In 2019, a hike of 6 to 35 percent targeted teachers, health workers, and technical staff, reflecting a deliberate attempt to strengthen critical professions. The 2022 clean wage reform brought a 5 to 26 percent raise, followed by the unprecedented 50 percent flat hike in 2023, funded significantly by Bitcoin revenues.
Now, with the commissioning of Punatsangchu II, expectations are naturally rising again. After all, past hydropower projects like Chukha, Tala, and Mangdechu set precedents of hikes following major commissioning. P II alone is expected to bring Nu 20 billion annually, with around Nu 10 billion in net revenue.
But the reality is more complex. The 2023 hike alone costs Nu 6 billion annually, of which Nu 4 billion is already being shifted to P II revenues. Loan repayments of Nu 8 billion and O&M costs of Nu 2 billion further limit fiscal space. Added to this are the pressures of the Nu 512 billion 13th Plan, shrinking foreign aid, and the growing needs of health, education, and infrastructure.
Equally important is the widening gap between public pay and a struggling private sector. Entry-level civil servants today earn what mid-level managers in the private sector make, raising questions about competitiveness and long-term sustainability.
While hydropower has historically financed salary increases, Bhutan must balance the aspirations of public servants with the realities of debt, inflation, and national development. Any decision on pay must weigh fairness, affordability, and the broader health of our economy.
“Thrift is poetic because it is creative; waste is unpoetic because it is waste.”
G.K. Chesterton