Pay hike hopes go high

KATHMANDU, July 6: For policymakers, the new budget brings hope for novel strategies to boost yawning economic development. For businessmen, it is time to expect new tax policies that could optimize their sales and profits. But, what about the expectations of roughly 420,000 government employees and 125,000 pensioners who are paid from the state coffers? Of course, their common optimism is to have ´a handsome´ hike in pay. [break]



Visit any government office these days, you can realize that salary hike, as usual, is the main point of discussion among the employees. At a time when inflation is hovering around 12.5 percent, it is obvious to expect a pay hike. But ´how much´ is the biggest question even though most of the employees hope for a raise by over 25 percent.



Nepal Civil Service Employees´ Union, which is close to the Nepali Congress, has demanded to raise the salary of peons, the lowest grade in the hierarchy of government services, by 59 percent to Rs 10,500 a month. In its 17-point demand handed over to the finance minister, the union urged the government to raise monthly salary of secretary to Rs 52,800 from the existing Rs 23,200. In addition to pay hike, the union has also demanded additional educational allowances for first two children of the government employees.



Similar, is the demand forwarded by Nepal Government Employees´ Organization, associated with the ruling CPN-UML. According to a memorandum handed to the finance minister, the organization wants the monthly salary of peons increased to Rs 12,000. While maintaining lowest-highest salary ratio at 1:5, it has urged the government to fix secretary´s salary at 60,000 a month.



"Our recommendation is aimed at increasing the ratio of the salaries of highest and lowest rank officials to the international average of 1:5 -- meaning that highest rank officials get five times more salary than the lowest rank ones get -- from Nepal´s existing ratio of 1:3.5," said Ganesh Basyal, the chairman of the organization.



In addition to a permanent pay review committee headed by the chief secretary, the government has also formed an experts´ committee to recommend ´reasonable pay hike´ for government employees. The committee led by former finance secretary Bhanu Prasad Archarya has recommended raising the salary of lowest rank employees by 25 percent to Rs 8,200 a month. Similarly, the Acharya committee has also recommended raising the monthly pay of secretary to Rs 35,000 from the current Rs 23,200. Though hardly nine days are left for the current fiscal to end, the permanent committee has, however, not yet submitted its annual pay hike report, said an official at the finance ministry.



Leaving aside all these demands and recommendations, a million dollar question is how much increment the government´s coffers can support without harming the fundamentals of macro-economic stability. Though finding an amicable answer to this question is a daunting task, it can be said that Nepali economy is not in a position to meet any of the demands and recommendation received so far, said a high ranking finance ministry official.



"Yes there has been a whopping 30 percent increment in revenue mobilization, but during the same period many liabilities running into billions have been added, thereby limiting the government´s ability to hike the civil servants´ pay," he said.



Nonetheless, something will be there at least to match with the inflation rate so as to prevent any shrink in the government employees´ consumption capacity. The official hinted that the pay hike will be around 15 percent and added that even that increment will add a financial burden of around Rs 8.5 billion to the country by taking the total wage bill to something around Rs 63.5 billion.



prem@myrepublica.com

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