Monday, August 25, 2008

Fair paying job

The intent of the Sixth Pay Commission is not quite problematic but implementation is key.

With the acceptance by the union cabinet of the recommendations of the Sixth Central Pay Commission (SCPC), five million employees working for the central government of India have finally been able to benefit from a wage restructuring after nearly a decade since the last such revision. This move should provide some relief to most of those working in the government sector, whose salaries do not compare that well with those of similarly positioned workers in the private sector, especially in the higher rungs. This wil soon be followed as before by the state governments too implementing the recommendations of the SCPC.

The recommendations in the SCPC highlight the necessity to reward qualitative performances and this is done through the instrument of the performance-related incentives scheme apart from the creation of running pay bands within groups of employees so as to avoid “stagnation”. The other emphasis in the recommendations is on incentives for employees who wish to retire after a minimum duration of service and on a gradual increase in pension benefits with age, apart from giving cognisance to reduction of gender biases in employment by provision of a better working environment and other pecuniary and gender-specific rules such as the availability of a larger number of days for maternity leave. These emphases need to be welcomed but proper implementation of the recommendations wuld be essential. A complaint of the defence forces that they have been discriminated against in the recommendation has been addressed with the provision of a special pay– albeit more at the junior/middle officer level and not for the jawans -- by the government in the final order.

As such, the intent in the recommendations is to provide a fair amount of compensation in government jobs through the instruments of the pay structure. Yet, such an exercise can only be successful if the implementation of the recommendations are in tune with the intent of the Commission. Critics of the public sector have argued that the SCPC's recommendations will not effect any change in the “system” as it is marked by corruption and wastefulness, but such a critique of the commission is misplaced as its brief was to lay out a rationalising structure of pay relative to performance and to provide for a recognition of skills and training as part of the structure. Corruption and reform of administrative structure of the government was not a part of the brief to be handled by the SCPC and they have to be targeted through other reforms in public administration.

There is the other critique that the pay commission's recommendations would perforce have too much of a fiscal impact on the centre's finances, by way of providing an average of 21 percent hike in the salaries of central government employees (as claimed by the government). The pay commission award would amount to nearly Rs 22,000 crores which would include the railway bill as well. The government's response that this fiscal pressure of Rs 22,000 crores has already been budgeted and factored in while calculating the targets for the fiscal deficit seems reasonable. The burden will no doubt be more on the state governments when they implement a similar revision.

There has, however, been resentment among certain sections of the labour force, particularly those in the lower rungs, that the increase in emoluments is not sufficient in comparison to those in the higher rungs. It is to be noted that the intent of the commission was to recognise skill upgrade and training, in contrast to the last Commission's emphasis on downsizing of government.

One problematic recommendation of the commission pertains to the effort to encourage early retirement through incentives such as full pensions based on a minimum level of service as opposed to full service. It would have been prudent for the government to raise the age of superannuation or at-least avoid the over-emphasis on downsizing on the basis of age, as there is no adequate proof to suggest that efficiency of the workforce is directly and inversely proportional to a decline in average age. This would also have given greater recognition to the rising life expectancy of the general population. As for the critique that the lower rungs of the public sector are paid too much in comparison to the private sector, it is to be borne in mind that spiralling inflation necessitates the emoluments currently paid to such workers apart from the fact that the private sector underpays lower skilled workers very poorly and those in the informal and unorganised sectors are paid a pittance.

At the same time, the effort has to be made to ensure that implementation of the recommendations do not tend to be subjective. This would mean judgement of performance and skill should be a decentralised exercise with adequate remedies, again an administrative detail beyond the purview of the Commission. In essence, the SCPC's recommendations and their acceptance by the government open up avenues for reforming the nature of government service by incentivising performance and at the same time provide emoluments and benefits of a fair order to those engaged in the service. It is now left to the means of administration to ensure that this intent is executed fairly and transparently.

Editorial written for the Economic and Political Weekly


Prasanth said...

Nice(and extremely informative) post/editorial

As for the Commission's emphasis on "encouraging" early retirement, isn't it also an acknowledgement of the immense rate of unemployment in the country and an attempt to encourage greater possibilities for hiring new blood and thus ecnouraging greater interest in the governemnt services among the youth?


Srinivasan Ramani said...

As for the Commission's emphasis on "encouraging" early retirement, isn't it also an acknowledgement of the immense rate of unemployment in the country and an attempt to encourage greater possibilities for hiring new blood and thus ecnouraging greater interest in the governemnt services among the youth?

Of course, there needs to be a youth infusion into government service. But should that infusion only come about by retrenchment/phasing out of the old or can that be arrived by augmenting the number of services provided therewith? Job substitution is not the same as Job creation, right?

Take for e.g. e-governance. How much potential does it have of youth infusion into employment? Quite high, no?

Prasanth said...

More jobs at a time when recruitments to existing vacancies has been frozen? I am a bit sceptical about that. :)

While I completely agree with your argument("Job substitution is not the same as job creation.."), I believe that the nature of thought that dominates most of the upper echelons of the governemnt is in favour of streamlining the government services(and streamlining is jut a polite word for reducing an individual's service period if not eliminating the post he holds altogether).

At the end of the day, I believe, the government's intention is to create a goverernment cadre imilar to that of th Army. One does his/her SSC and has an option to retire with decent benefits which can be invested in th private sector along with his/her own abilities.


Srinivasan Ramani said...

I think that the necessity of public service has been never higher than now. For all the complaints about lack of public action through government work, all these can be mitigated through newer institutions of public service. The private sector with its advantages can be of use in other sectors; but since it has the inherent motive of going toward profit, it does not bother about services which do not come under the criteria of "margins"/"returns".

It obviously means that those in the ruling echelons have to do a lot of thinking about job creation as well. After all, it is constitutionally mandated, too.