Study Finds Major Disparities in Benefits Across Public Institutions

A government study panel has recommended major reforms after identifying wide disparities in the remuneration and benefits received by employees and officials working in public institutions.

According to the panel’s report, there are significant inconsistencies in both monetary and non-monetary facilities provided to staff across government-owned institutions, boards, committees and regulatory bodies. The findings are based on a comparative review of 60 public institutions.

The study revealed notable differences in salaries, allowances, insurance coverage, retirement benefits, social security, loan facilities and non-monetary services—even among institutions with similar mandates. The panel found no uniform standard for determining salaries and perks of board members and chief executives. In some institutions, pay is set by the government, while in others it is determined by the board, the general assembly or the line ministry. In certain cases, remuneration is fixed through individual contractual agreements, creating further inconsistencies for similar roles and responsibilities.

The report shows that some institutions offer up to 41 types of allowances, including paid leave encashment, various bonuses, insurance, medical reimbursement, uniform allowance, telephone and snack allowance, risk allowance, childcare allowance and performance incentives.

The life insurance coverage provided to employees varies widely—from Rs 100,000 to Rs 1.9 million. Some institutions provide insurance equivalent to seven years of salary, while others reimburse medical expenses equal to one to three months’ salary. Non-monetary facilities include free or subsidized airfare, telephone services, electricity, drinking water and food supplies. Under loan facilities, some institutions provide housing or vehicle loans ranging from one year to 10 years’ worth of annual salary.

The panel attributed these disparities to weak oversight, differences in legal frameworks, pressure from employee unions, varying financial capacities and the absence of fully implemented social security systems. It concluded that such inconsistencies weaken financial discipline, increase workplace disputes, reduce productivity and complicate reform efforts. To address these issues, the panel has recommended extensive legal, policy and structural reforms.

Legal Reforms Proposed

The panel has called for a new Public Institution Financial Responsibility Act to ensure responsible, transparent and sustainable financial management in public institutions. The act would cover financial discipline, governance, asset management, debt and grants, investment, monitoring, evaluation and matters related to salary and allowances.

Although the current Work Division Regulation (2017) gives the Ministry of Finance authority over policies, salaries and dividends of public institutions, it does not clearly mandate prior approval from the ministry when determining staff remuneration. The panel recommended strengthening the legal and policy framework to address this gap.

Strengthening Policy and Regulatory Frameworks

The panel proposed developing uniform service and employment regulations for all regulatory bodies, public institutions, boards and committees. These regulations would include minimum standards for financial and non-financial benefits, ensuring consistency across all institutions. It also recommended making prior approval from the Ministry of Finance mandatory before including salary, allowances or other benefits in institutional regulations.

Performance-Based Incentives

The panel noted that only a few institutions have adopted performance-based incentive systems, despite remuneration and benefits being expected to enhance productivity. Although some organizations offer as many as 41 types of allowances, bonuses and lump-sum payments through welfare funds, these are often not tied to performance.

Grouping and Standardizing Facilities

To prevent inefficiencies that may arise from enforcing a single benefits structure for all institutions, the panel recommended grouping institutions based on work complexity, sensitivity, nature of operation and financial capacity. The Ministry of Finance should then develop separate remuneration and benefits standards for each group, and all institutions must adhere strictly to those standards.

The panel also suggested restricting benefits for institutions that depend on more than 50 percent government grant or have been running losses for three consecutive years, stating that such institutions should not be allowed to offer higher salaries and allowances than those available in civil service.

Meeting Allowances: Up to Rs 9,000

The study found 11 different rates of meeting allowances across 59 regulatory bodies, institutions, boards and committees. The allowances range from Rs 2,000 to Rs 9,000 per meeting. Nepal Rastra Bank and the Nepal Electricity Authority offer the highest rate (Rs 9,000). Nineteen institutions, including Herbs Production and Processing Company Limited, Nepal Water Supply Corporation and Nepal Forest Corporation Limited, offer the lowest.

Chief Executives’ Salaries

Among government and semi-government institutions, the highest salary for a chief executive is at Rastriya Banijya Bank, where the CEO earns Rs 450,000 per month. CEOs of Agriculture Development Bank and Nepal Bank Limited each earn Rs 400,000, while the chief executive of the Nepal Tourism Board receives Rs 391,000 monthly.

The report states that chief executives in some institutions receive more than 25 categories of allowances, including telephone, fuel, communication, inflation, incentive, special responsibility, housing, security, medical treatment and housing rent, in addition to annual festival, uniform and performance allowances.