Mind the gap

The DNT government achieved a significant milestone yesterday. And they did not commemorate it with any fanfare. In fact, the opposition party and the media and all of social media have also been quiet.

What’s the milestone? Six months: our third elected government completed their first six months on the job yesterday. For those who may have forgotten, His Majesty the King conferred dakyen to the incoming prime minister, ministers and opposition leader on the 7th of November last year.

But it’s only six months? Yes. Now, look at it another way. Six months means 10% of the government’s term in office. In other words, this government has already spent 10% of their tenure. That’s a significant portion of their time. Yet, I do not see anything significant in terms of narrowing the gap.

Yes, the government removed the cut-off mark after class X allowing all students to move to high school. But at what cost? Removing the cut-off mark has single-handedly done more to undermine the quality of education than anything else in the history of modern education in Bhutan. So all students can count on making it through high school, but because of the decline in the quality of education, students from poorer families will now be placed at a greater disadvantage.

Doing away with the cut-off mark was easy. It was also reckless. Now it is incumbent on the government to compliment that one reckless policy with a string of good policies, some of which will be difficult, to ensure that the quality of education is not compromised.

Otherwise, the gap will increase.

Yes, the government also instituted the 4th Pay Commission and they are currently studying their report. But why did the government make the report public? Matters concerning money – that includes taxes and budgets, but especially pay and salaries – cannot be discussed in the public for one simple reason: you cannot please all the people all the time!

But you must fulfill your promises. You must narrow the gap.

Elementary support personnel will receive an increase of Nu 2,000 (from Nu 7000 to Nu 9000). That’s hardly going to narrow the gap, especially when the PM, ministers and MPs can expect increases of Nu 25200, Nu 18200 and Nu 9235 respectively. An increase of Nu 2000 for ESP is a pittance. That’s what they received way back in 2014 when their salary was increased from Nu 5000 to Nu 7000.

But General support personnel fare even worse. GSP I staff can expect a pay increase of Nu 1769 while GSP I can expect just Nu 1385! Similarly, O4, O3, and O2 can expect increases of just Nu 1790, Nu 1965 and Nu 2120 respectively.

And local government officials fare the worst. Elected local government officials will not receive any increase in their salaries! True, LG officials received two pay increases during 2013 to 2018. But that’s mainly because their original salary base was unacceptably lower than their counterparts in the government.

The Pay Commission’s report is not going to narrow any gap. In fact, it will widen the existing gap. So to narrow the gap among public officials, the government must narrow the pay gap – in absolute terms, not by percentages and compression ratios.

Otherwise the gap will increase.

Then there’s the gap between public servants and the rest of the country, especially our rural folk. Here, the government has done precious little. I can say that with confidence simply because I hardly see any new development work being implemented. With development work throughout the country at a virtual standstill, no gap is being narrowed, not between the public and private sectors, and certainly not between our rural folk and the rest of the country.

It’s been six months since the DNT formed the government. And they have already spent 10% of their tenure. But there’s been no new development work, not in our towns and not in our villages. And without development we cannot narrow the gap.

I voted for DNT. I voted to narrow the gap. It now becomes my responsibility to hold them accountable to fulfill their promise.

So as the government completes a significant milestone, and while the opposition party and the media and all of social media are (complicity?) quiet, I would like to respectfully caution the government: Mind the gap!

Fueling growth

Everyone is talking about the Pay Commission’s report. And I too will gradually join the conversation. To start, I wish to discuss the Commission’s recommendation to increase fuel taxes.

Everyone would remember 2013.

The country was experiencing an economic crisis. In its efforts to address the critical shortage of Indian rupees, the central bank imposed a series of policies including restricting the supply of rupees; rationing rupees to Bhutanese traveling to India for business, studies, medical treatment or pilgrimage; closing bank accounts of Indian citizens; and suspending loans in several sectors. These policies did little to solve the rupee crisis. Instead, they fueled panic, prompting citizens to hoard Indian currency. The government also added to the panic by curtailing construction, banning the import of vehicles and furniture, and selling hundreds of millions of dollars from the country’s reserves.

The result was that Bhutanese were buying rupees at a premium, paying Nu 110 for every Rs 100 when in fact the two currencies were pegged at equal value. More importantly, the entire economy took a big hit, growing at just 2.14% in 2013, the lowest GDP growth in decades.

So, soon after assuming office in 2013, I worked closely with RMA and successfully addressed the rupee crisis. In addition, we gradually improved the economy by injecting liquidity in the banking system, investing in infrastructure (notably in widening the East-West Highway, building central schools, improving airports, blacktopping gewog roads, constructing farm roads, and expanding the electricity and telecom network), reducing interest rates, improving ease of doing business, waiving taxes for small businesses, establishing REDC, and providing unprecedented support to hydropower, tourism, agriculture, livestock and CSIs.

Our hard work paid off. GDP growth rates increased from a low of 2.15% in 2013 to 5.4% in 2014, 6.6% in 2015 and 8% in 2016. Additionally, GDP was forecast to grow by 8.4% in 2017 and 9.2% in 2018.

Table by The Bhutanese

And to ensure that the economy continued to grow, fuel prices were reduced drastically in November of 2017. The idea was that lower fuel prices would drive down the cost of construction, traded goods and some other services. The idea was also to allow truck drivers and taxi drivers, most of whom own the vehicles they drive, to earn more money. And finally, the idea was to make travel cheaper in rural Bhutan where farmers are required to drive much longer distances to get to neighboring villages, gewog centers and dzongkhag headquarters.

That’s why I was alarmed to read the Pay Commission’s recommendation to increase taxes on fuel. Specifically, they recommended that “In order to promote the Polluter Pays Principle, it is timely to revise the green tax on fuel. For example, if the green tax is revised by 5%, there is opportunity to generate additional revenue of Nu.450 million per annum.”

If increased consumption of fuel is leading to increased pollution, I would support an increased “green tax”. But I would do so on condition that revenue from green tax should be used for climate change mitigation and adaptation measures, not to finance increases in salaries.

Otherwise, the so-called green tax must not be misused. In fact, the price of fuel should not be increased so soon after they were deliberately reduced. Doing so would affect the incomes of truck drivers, taxi drivers and farmers. But, and more importantly, raising taxes on fuel would risk undoing all the hard-earned gains we have made in the economy since 2013.

In this context, the government should remember 2013.

Constitution matters

“Constitution doesn’t imprison and shackle”. With these five words the prime minister argued that the government could raise tshogpa salaries without consulting the Pay Commission.

Indeed, the Constitution does not imprison; the Constitution does not shackle. That is not the purpose of the Constitution. And we know that.

We also know that the purpose of the Constitution is to provide a set of rules outlining how our kingdom must be governed. These rules define the responsibilities of the various institutions of the State – the monarchy, the executive, the legislature, the judiciary, constitutional bodies, local governments, and others – and authorize powers to these institutions so that they can fulfill their respective responsibilities.

But none of the institutions, not a single one of them, enjoys unlimited powers. That’s why the rules also specify checks and balances limiting the scope of their authority. These checks and balances are intended to minimize the risks of mistakes from being made when governing our kingdom. They are also intended to prevent dangerous concentrations of power and authority.

So yes, the Constitution does not “imprison and shackle” the prime minister and the government. But whether they like it or not, the Constitution does subject them to various checks and balances to ensure that our kingdom is governed well.

But it wasn’t just those five words. A story by Bhutan Observer shows that a lot more words were used, and excuses made, to argue that the Pay Commission did not have to be involved to raise salaries.  It’s worth reading the entire article again. So I’m reproducing it here, along with my comments which I’ve inserted, in parenthesis and in red, inside the article.

[Continue Reading…]

Tshogpa salaries

The government needs to understand what they can do and what they cannot do.

Last month, on October 27, during a press conference the finance minister announced that, “… while tshogpas deserve a raise, there is not enough money to raise their salary.” Furthermore, he clarified that, “an increment in the salary should be approved by the Pay Commission.”

So basically, we were told that the government can’t increase tshogpa salaries because (1) they don’t have enough money; and (2) the Pay Commission would have to approve any increase.

But last week, on November 16, the government announced that they had increased the salary of tshogpas to Nu 5,000 per month. And that that increase was decided by the cabinet.

So basically, now we are made to understand that (1) the government has enough money to increase tshogpa salaries; and (2) the Pay Commission does not have to approve that increase.

In fact, here’s what the government can do: increase tshogpa salaries. Why? Because tshogpas were being paid below the national minimum wage. So whether tshogpas deserved a raise or not, and whether the government had enough money or not, their salaries had to be increased to at least equal the national minimum wage level.

But here’s what the government cannot do: increase tshogpa salaries unilaterally. Why? Because only the Pay Commission has the authority to recommend increases in the salaries of public servants, including tshogpas who are members of the local government.

That’s why I called for tshogpa salaries to be increased, but objected that the government does not have the authority to do so unilaterally.

In order to ensure that the increased salaries of the tshogpas are lawful, the government should constitute a Pay Commission immediately to recommend revisions to the tshogpa salaries. There’s enough time for their recommendations to be approved by the government, and submitted to the next session of the Parliament.

Paying for support

Dasho Nima Wangdi, director general of finance, justifying the government’s decision to increase the allowances and benefits of gups, was quoted as saying that:

The pay commission, which was not a full time committee, could be instituted by the government only for major systemic changes in pay and allowance structures. “In the gups’ case, the government has the full authority to decide.”

He’s right: the Pay Commission is not a full time committee.

And he’s wrong: the government does not have any authority to revise the pay and allowances of public servants, including gups, independently. It can do so only at the Pay Commission’s recommendation, and subject to the endorsement of the Parliament.

Article 30.2 of the Constitution:

The Pay Commission shall recommend to the Government revisions in the structure of the salary, allowances, benefits, and other emoluments of the Royal Civil Service, the Judiciary, the members of Parliament and Local Governments, the holders and the members of constitutional offices and all other public servants with due regard to the economy of the Kingdom and other provisions of this Constitution.

Article 30.3 of the Constitution:

The recommendations of the Commission shall be implemented only on the approval of the Lhengye Zhungtshog and subject to such conditions and modifications as may be made by Parliament.

The government’s decision to increase the allowances and benefits of the gups is arbitrary. It may also be illegal. And Dasho Nima’s support for the decision is misguided.

Increasing the travel allowances of the gups and providing them with mobile phone vouchers is no small matter. The decision is expensive. The decision affects other public servants. And the decision could be politically motivated.

But, it’s not just the gups who are benefiting from our government’s disregard for procedure. Last year, ACC employees were also granted an allowance arbitrarily. And the National Assembly approved pay increases for members of parliament without the recommendation of the Pay Commission.

The rule of law is important. Especially during these early years of our democracy. And especially so, when we’re dealing with money.

Granted, there may be a need to revise the salaries, allowances and benefits of the public service. If so, reconstitute the Pay Commission. Let them do their job. But take their recommendations seriously.

And follow the law. Then civil servants won’t have to cover for the government.