Private sector unable to afford a hike in current economic climate

The Finance Minister, Lyonpo Namgay Tshering, during the last meet the press on 29th November 2019 was asked by The Bhutanese about if the government is aware about a growing wage gap between the government and the private sector and what would it do to narrow the gap.

The Finance Minister said that for the private sector there would be certain tax reforms and fiscal measures which would indirectly facilitate private sector growth.

General Secretary (GS), BCCI, Sangay Dorji, said, “Pay-revisions have taken place for the civil service and the SOEs’ but what is left is the private sector. Peer pressure is on the prowl. While in the government, the fund comes from the government exchequer, question of affordability arises for private sector.”

He added that the timing is not very favorable, but with changing times, the inflation, cost of living going up, salary hike is necessary whether it is private, public or elsewhere.

“Looking at the shape of the economy, it is very apparent from the newspapers list of lands and properties on sale, people are not able to pay. Where is it going wrong?” the BCCI GS questioned.

He said there will be pressure on the private sector to increase the salary of its staff. On the other hand, some private sector employers are already laying off their employees which is worrisome, he said.

He pointed out that in the entire 12th Plan, just 37 percent focus is on the construction sector.

“Recently, I was talking to the private sector members and especially the construction sector, people are out of jobs at hand, right now. When I say economy is not doing well, it does not include all, as some might be doing well. Exporters are suffering, truck owners, boulder exporters, to name a few and from a macro perspective, there is an issue in the economy. I’m sure the government will look into it immediately, and if that is not straightened out, the private sector will suffer. As employers, if they cannot afford, they will lay off people, impacting unemployment,” he said.

General Secretary, Association for Bhutan Cable Operators, Sherab Gyeltshen, said, “With the pay hike for civil servants and the recent pay hike for SOEs employees, I feel this will have a huge impact on the private sector companies. Most private sector companies cannot afford pay hike, like in SOEs and civil service, when the economy is not healthy. This could lead to losing good people for better salaries. Some companies might even minimize their staff strength, and add to the unemployment issues. Hope our government is concerned of the private sectors and the employment issues.”

Finance Officer, Film Association of Bhutan, Thinley Namgay, said the pay hike has both positive and negative impact.  “SOEs pay hike could result in increase in purchasing power. Hence the sales of some private enterprise’s product could increase with increase in SOEs pay,” he pointed out.

The immediate impact of SOEs pay-hike could be increase the cost of living and commodity prices, which instantly affect the private employees. Private sector may lose skilled human resource if they cannot manage payment alignment to SOEs’ pay hike, he added.

He said some SOEs still run on loss, so to meet the pay revision, the SOEs might increase the price of their products, which will then affect the price of other private business commodities.

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