SOEs pay raise

Following the civil servant pay revision, the government approved the pay revision of 46 percent to 72 percent for State Owned Enterprises (SOEs) on 20 October.

The government shared that they will fund the pay raise of the three SOEs, Bhutan Broadcasting Service (BBS), Bhutan Livestock Development Corporation Limited (BLDCL) and Farm and Machinery Corporation Limited (FMCL).

Around mid-2023, it was emphasized that there were no special funds in the budget to provide a 50 percent pay hike to SOEs under the Ministry of Finance (MoF), unless these entities could independently sustain such increases, as stated by the Acting Finance Secretary.

According to the Finance Minister Namgay Tshering, “In the case of SOE pay revisions, the initial procedure involved requesting pay revision proposals from the respective SOEs and their Boards. In general, most of the proposals closely aligned with the salary increases in the civil service, which ranged from 55 percent to 74 percent. Only a few SOEs presented different pay revision plans based on their financial performance.”

Furthermore, it was emphasized that the establishment of SOEs and their governing regulations, as stipulated by the Public Finance Act 2007 and its 2012 Amendment, are intended to serve both profit-oriented and socially mandated purposes. The salary revisions were not arbitrary but were based on proposals submitted by the respective SOEs.

Prime Minister Dasho (Dr) Lotay Tshering, “The answer for having enough is Yes and No. We will never have enough. It was noted that the capacity to fund these pay raises exists to some extent. The belief is that higher compensation can lead to improved performance from employees. Some companies can finance these salary hikes through their revenues, while others unable to do so will receive government subsidies.”

Among the SOEs, this is the first time Kuensel is getting a pay hike with government support as equity since its delinking and floating of 49% shares to private and institutional shareholders. This new move comes as Kuensel has made consecutive losses.

“Regarding giving pay raise for Kuensel, the government owns 51 percent of the share so, we have to provide that 51 percent if the shareholders decide to give a pay hike. They do not have a profit-making mandate anyway and so the government has to do the social mandate,” the PM further added.

Previously the Acting Finance Secretary said Kuensel would not get any subsidies or pay hike support as it has private shareholders and Kuensel already gets indirect support through government business like printing and others.

The Finance Minister Namgay Tshering had earlier said that there is no trend to give an operational subsidy to Kuensel, but as an SOE it might qualify to get a guarantee from the government to venture into borrowing, but that too will be pro-rated to suit the portion of the government share.

It seems the cabinet took a decision that overruled the MoF stand on the issue and decided to give 51% of the hike with the conditions being that 49% of the shareholders have to also agree to some hike.