The Labour Ministry will strictly monitor the implementation of the provident fund (PF) scheme in the private sector from June this year, states its notification, circulated recently to the private entities.
The ministry found that from over 59,000 licensed enterprises and firms in the country, only 3,696 enterprises have registered for PF scheme with the Royal Insurance Corporation of Bhutan Limited (RICBL) and Bhutan Insurance Limited (BIL).
However, labour officials make it clear that those not complying with rule will be penalised as per the Labour and Employment Act. Section 99 of the act and its regulations state that an employee is entitled to gratuity and provident fund upon retirement from the service.
Globally, a private sector remains the main engine of job creation but in Bhutan, public sector is still generates major jobs in the country. A report on Bhutan’s Labour Market 2016 also says the same.
But, for the hope of the scenario to be changed, the labour officials are of the view that provision of retirement benefits: provident fund and gratuity must be initiated by private firms and entities.
“Same like the civil service, if a private sector grants PF, gratuity and maternity leave, youth will be willing to work in private companies. At present, one of the reasons why most youth are reluctant to work in private firms is because there are no such benefits and they are paid peanuts,” says Sonam Wangdi, the Director of Department of Labour.
He views that the private sector has huge opportunity in areas like providing benefits, incentives, and training opportunities to make jobs attractive. However, Phub Tshering, the Secretary General of the Bhutan Chamber of Commerce and Industry (BCCI) begs to differ. “If you say there will be tax deduction component while filing tax on the amount of money that is paid by the employer in his contribution to the PF of employees, then I think many firms would introduce retirement benefits.”
He further remarked: “Unless the private sector growth is profitable, many small establishments will not be able to come up with retirement schemes.”
Those small, medium and large scale enterprises certified by the Economic Affairs Ministry fall under the PF scheme. And as per section 2 of the Regulations on Working Conditions 2009, all enterprises employing five or more employees must comply with PF scheme. A penalty of Nu 3m was collected from private sector for not complying with the Labour and Employment Act from 2012 till last year.
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