MoF and RCSC to change the current civil service pay and allowances system

The proposal is to move towards payment based on a clean wage system that is budget neutral in the initial years and the near future introduce performance-based incentives that support a well-functioning Civil Service

The MoF and RCSC are jointly working on a proposal to replace the current Civil Service pay and allowances system with one that is based on the principles of a clean wage system.

According to the Royal Civil Service Commission (RCSC), under a clean wage system, civil servants will get a pay package without hidden benefits.

However, the existing system of pay and allowances is complex, with more than 25 different types of allowances. These allowances are taxable, non-taxable, as well as discretionary in nature.

“This creates an administrative burden, compromises transparency and accountability of public expenditure; encourages corrupt practices; and increases the overhead cost of the Civil Service.”

Furthermore, the current pay’s narrow salary band does not provide the bandwidth to support a robust performance management system.

An official from RCSC shared that the proposal is to move towards payment based on a clean wage system that is budget neutral in the initial years and the near future introduce performance-based incentives that support a well-functioning Civil Service.

This reform initiative intends to ensure that civil servants who execute the most significant function of implementing development programs are paid equally for their work.

“The reform intends to increase the average remuneration, allowance, and benefits through savings as a result of right sizing and reorganizations,” the RCSC report states adding that this is still a work in progress and that the MoF is leading the workstream.

Business Bhutan learned that the clean wage system is a Singaporean model.

“We cannot say that what works in Singapore will work here,” an official said, citing that the only and most important aspect of this system is transparency.

He said that allowances received cannot be hidden and agreed with the RCSC that what exists now is complex, with more than 25 different types of allowances.

“There are also sitting fees that Board directors receive and in Bhutan, one person sometimes is a member of three or even more boards,” he said, adding all this will become transparent.

Similarly, a retired corporate employee said that with transparency, people will need to work more. “If I am a director of a department and everyone knows how much I take home a month, I will have to justify the perks I get. Further, people will question someone who does little work but takes home a large sum at the end of the month,” he said.

Meanwhile, a civil servant who did not want to be named said that performance-based incentives are not new.

“The talk was there for a long time and the new report of the commission does not spell out how the incentives will be given,” he said, adding there is ambiguity about who will assess one’s performance also.

“Will it be like APA or is something new on the cards,” he questioned while reiterating that performance-based incentives need to be implemented as soon as possible.

Further, he shared that the morale of an average civil servant is very low now. Instituting the performance-based incentive is one of the ways to lift their morale.

Sherab Dorji from Thimphu