Widening Pay gap between the civil service and the private sector

The pay for civil service will be revised from this July, and this will create a huge gap in consumption expenditure as well as purchasing power between the private sector employees and civil servants. Therefore, it is imperative to compare the income of employees in the private sector and civil service.

A flat 50 percent hike is given to everybody in the civil service from the Cabinet Secretary down to the support staff. Combining the last years 5 percent hike and the one-time fixed payment at P1 and below, the hikes combined are 55 percent hike at the higher level and 74 percent hike at the lowest level.

With the hike, an ESP level staff will earn from Nu 21,730 to Nu 24,580. Similarly, someone at GSP level will earn between Nu 23,535 to Nu 26,685.

Those employed in the private sector already had a pay gap with the civil service, however, with the pay hike, there is now a huge gap in the income earned. For a private sector employee working as sales assistant, their salary ranges from Nu 8000 to Nu 12,000. However, for a sales assistant for a popular franchise like Miniso, they start their salary from Nu 15,000 and earn around Nu 18000.

Currently, an entry level pay at private sector is around Nu 11,000 to Nu 15,000 at Tashi Group of Companies which is nearly about 270 percent less than the salary for entry level pay for a college graduate in civil service which is around Nu 40,600.

The entry level pay at private sector for a fresh graduate is even lesser than the salary of the lowest pay for civil service which is around Nu 21,000 to Nu 24,000.

Even for 5-star hotels like Tashi Taj, the pay level for their employees range from Nu 15,000 to Nu 40,000 depending on the number of guests served. Most hoteliers earn money from services charge, with a smaller number of tourists, the pay they get in the form of allowances are also less or reduced.

Also, many private business entities have not been able to pay their employees on time due to the pandemic, which has adversely affected business.

State-owned enterprises (SoE) under the Ministry of Finance will not get a hike according to the Acting Finance Secretary as it is not budgeted.

As the private sector is not doing well, there is no guarantee of a pay hike, with most private sector employees finding their future bleak. The company owners are also concerned about employee retention.

As the purchasing power increases, the concern on increasing inflation was also discussed in the Parliament during the pay revision deliberation. Many people are concerned about inflationary pressures, especially the private sector employees, as living in Thimphu is already expensive.

With already high rental pressure, with the pay hike, many are concerned about unnecessary hikes in the market, especially the rents and transportation cost.

According to Namgay, a private sector employee, he’s concerned about the high rental pressures and inflation due to the pay revision. “We will have a huge income gap, but I’m mostly concerned about rent spike. Although there was a notice warning of unnecessary rental spikes, I feel that it is inevitable that there will be a rental hike. Living in Thimphu is already expensive and if the rent is increased, us private sector employees will be affected a lot.”

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