The Narendra Modi government’s decision to accept the 7th Pay Commission recommendations, promising Rs 1 lakh crore of hikes in salaries, perks and pensions for over 1 crore serving and retired government employees, has been hailed as a big bonanza for the top executives in the government. Besides, this is also a booster dose for the growth-hungry Indian economy that’ll benefit from a consumption boost.
But, no government employee is really celebrating the 7th pay commission hike — neither the top babu nor the class C employee, who is the lowest cadre. Why?
Reasons will vary depending on who you talk to.
If it is a top executive, he will complain about the huge difference in compensation with the private sector. Even after the 7th Pay Commission hike, the highest salary drawn by a government employee, the cabinet secretary, is Rs 2.5 lakh per month.
If one compares this with that drawn by a chief executive of a medium-sized private sector company with an annual turnover of Rs 1,000-2,000 crore, this figure is a pittance. The private sector counter part will be drawing anywhere between Rs 10 lakh and Rs 25 lakh per month, besides generous provisions for annual bonuses and performance-linked perks.
“This is one reason why there is a drain form the government to private sector that has escalated of late,” observes a senior government official who wished not to be identified. “And many of those who stay back have a feudal-sort of mentality. They make up for their losses for serving the government by way of hefty ‘under table’ payments,” the official said.
The government has announced salary increases in the range of 14. 27 percent to 25.5 percent. The government has put on hold allowance payments. This is against about 40 percent rise in pays implemented by the sixth pay commission in 2008. The 7th pay hike, the employee unions argue, is the lowest in the last 70 years.
Unlike the private sector, where the compensation is revised annually depending on the performance and skills, government employees have to typically wait for a decade for any substantial revision in their wages, if one sets aside the 3 percent routine annual pay increase.
Often, even the well performing bureaucrats feel that there is no value for their work, beyond the element of mental satisfaction, since the reward is same for the performers, laggards, sleepy heads and those who take a detour during their morning walks to office only to punch in their attendance and later return post lunch.
Performance-based pay dumped?
A quick glance at the 7th pay commission recommendations show that the government hasn’t so far accepted the Mathur panel recommendation of performance-based pay or has watered down the key proposal to nothing.
Finance minister Arun Jaitley largely dodged questions on performance pay saying administrative issues will be looked at by a separate committee. This has irked many bureaucrats who were batting against uniform pay for all.
This was suggested by the sixth pay panel too, but remained on paper since there was no methodology to effectively assess performance. Mathur panel, noting that now the systems are in place, had pushed for performance pay and even sought to change the bonus mechanism.
“We are also of the view that there should not be automatic payment of bonus and all existing schemes of payment of bonuses should be linked to productivity,” it said.
Until the time the performance-linked pay scheme is implemented, the existing bonus schemes should be reviewed and linked with increased profitability and productivity under well-defined parameters, the panel had proposed.
This recommendation was critical since if the pay is linked to performance that can change the very ‘sarkari’ nature of the government staff and improve the productivity of the government departments. The Mathur panel also talks about how the civil servants need to be more efficient focusing more on targets and not processes.
Now, in the case of non-executive cadre (the C-class employees, there is no more class-D peons), their salary is now better than their counter-parts in the private sector. Jaitley, during the presser, cited an IIM-Ahmedabad study that said the pay of government employees is now distinctly greater than their private sector counter parts leaving no room for protests.
But, they too are unhappy. Why?
The fundamental reasons can be tracked to the rising aspirations of middle class and a sharp spike in the cost of goods and services over the period, though inflation figures indicate otherwise. When it comes to ambitions, the class difference almost nil. The wish for better education and lifestyle among the lower-income group is as high as the upper class.
“Even a clerk wants to send his son to a top engineering college or even abroad for higher studies. That is one side of the ‘problem’ why the class C staff isn’t satisfied with even a marginal increase in pay. On the other hand, the cost of living and prices of food items have gone up so much since the sixth pay commission that a salary of Rs 20,000 means nothing for him,” said the official who quoted earlier.
That’s a valid argument. The pay package of non-executive staff, which makes up majority of the total government workforce, hasn’t gone up commensurate with the sharp rise in the costs of expenses. This is possibly the reason why they lament despite the pay increase, the official said.
If indeed the government has dumped the proposal to link the pay increase and bonus provisions to performance and targets, that is a big regressive step and mistake by the Modi government. It wouldn’t do any good to improve the efficiency and work culture of the government staff.
As for the Rs 1 lakh crore bonanza, yes it will certainly fuel the consumption growth in the economy. But, don’t get it wrong thinking that the government staff are happy. They are not.http://www.firstpost.com/business/7th-pay-commission-heres-why-govt-staffers-arent-really-celebrating-windfall-2864594.html?utm_source=FP_CAT_LATEST_NEWS
