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Introduction of the Pay Structure Reform Bill of Bhutan 2022

Posted on :28 November 2022

The Finance Minister, Lyonpo Namgay Tshering introduced the Pay Structure Reform Bill of Bhutan 2022 today. The Bill was deliberated and passed by the National Assembly and forwarded as a Money Bill to the National Council as per the Public Finance (Amendment) Act of Bhutan 2012.

Introducing the Bill, His Excellency informed that the reform is not a pay revision but a reform in the pay structure of the public servant’s wage system. The main idea of the reform is to put in place a system with greater transparency and accountability with the adoption of a clean wage without any hidden fringe benefits. The Pay Structure Reform Bill will have no disruption to the basic pay structure, and the reform has considered a 5% indexation for all public servants at P1 and below to compensate for the soaring inflation impacting the cost of living.

Highlighting the current spending on salary, which is about 58% of domestic revenue since there is no upper ceiling in the system, and it is an opportunity to make the upper ceiling as it is one of the highest in the world. The pay structure under a clean wage system will have fixed and variable pay. Fixed pay includes monthly basic, and non-pensionable monthly salary (House Rent Allowances and Communication allowances), while variable pay comprises monthly variable compensation and performance-based incentives. The discontinuation of the vehicle import quota, cash handling allowances, red kabney allowances, and sitting fees is unnecessary while assessing the emerging situations and nature of work.

Pointing out the need to review those recommendations provided by the Economic and Finance Committee of the National Assembly on sections 31, 32, 33, and 63 of the Pay Structure Reform Bill of Bhutan 2022 were also requested.

The commencement of the Bill is in three categories, for which the National Council Members shall come into force after constituting the new National Council. For the National Assembly Members, it shall be after the formation of the new Government. The implementation for the civil servants and other public servants will be from the next financial year (1st July 2023).

Some Members shared their concerns about adopting the Singaporean system citing the variable differences in the political system and economic situation. Some asked if the Pay Structure Reform Bill is in line with the entitlement acts since the Bill repeals the Pay Revision Act 2017, the Pay Revision Act of Bhutan 2019, and the Pay Revision (Amendment) Act of Bhutan 2020, for which the Minister accordingly responded to the clarifications.

Following the introduction, the Natural Resource and Environment Committee proposed the Forest Nature and Conservation Bill for adoption. The Bill was adopted unanimously with the 23 members present and voting.

Similarly, the Economic Affairs Committee also proposed the Property Tax Bill for adoption. Accordingly, the House adopted the Property Tax Bill of Bhutan 2022 with 21 ‘Yes’ and 2 ‘Abstain’ of 23 Members present and voting.


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