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Why government employees don't deserve a pay hike

By Sudhir Bisht
July 04, 2016 15:21 IST
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Government employees

Upon implementation of the 7th Pay Commission the expected yearly burden on the central exchequer will be more than Rs 100,000 crore.
Central government employees will get on an average a 24% pay hike.
Still, the unions aren't happy.
Sudhir Bisht asks if the employees deserve any hike at all.

What happens in a household where there is just one breadwinner and his income rises gradually whereas the household expenses rise more?

The breadwinner, in most cases the father, gets unstinted support from his life partner -- the mother of the family. The children, especially those who have passed the stage of being toddlers, sympathise with their parents' sense of bemoaning when they aren't able to provide as much for the family as they would have liked to.

This is what an ideal Indian family is all about.

And this is what Mahatma Gandhi too had visualised as the ideal relationship between employees employers in free India. He had wanted the owners of organisations to act as the trustees and share their profits with the working class in a fair and transparent manner.

India's annual Budget is an exercise in the direction of Gandhi's trusteeship process. The finance minister gives an account of last year's budgeted versus actual fiscal performance and he lays down the budget for the next year.

Like the head of the family he assigns expenditure budget(s) for all his children, in this case for the various sections of economy.

Needless to say that while the government allocates all resources that the country has, its own children, the central government employees, never seem to have enough of what they get.

Central government employees and pensioners form under 0.8% of the Indian population. They represent less than 9% of the work force in the organised sector and by all accounts this means that they are less than 1% of the total work force in the organised plus unorganised sectors put together.

And yet this miniscule group of 10 million central government employees take away an estimated 12.6% of the central government's total expenditure towards their salaries, benefits and pension.

The 7th Pay Commission recommends doubling the minimum starting salary from the current Rs 7,000 per month to Rs 18,000 per month. It also recommends near tripling of the maximum salary from Rs 80,000 per month to Rs 250,000 per month.

The Commission recommends the increase in the salary to be effected from January 1, 2016 and it also proposes the upper limit of gratuity to be doubled from the existing upper limit of Rs 10 lakh (Rs 1 million).

It is important to point out that the 7th Pay Commission has retained the 3% annual increment formula across all employees. It was earlier speculated that the annual increment may not apply to employees who don't perform at par with expectations. But this hasn't happened, quite expectedly.

The Commission's recommendations would add an extra 0.7% burden of the GDP. The expected yearly burden of revised pay and pension will be Rs 102,000 crore.

Still the unions aren't happy. They have accused the government of throwing crumbs at them.

Yes, you heard it right. Rs 102,000 crore amounts to crumbs for central government employees.

In spite of all the benefits, central government employees aren't happy.

The Bharatiya Mazdoor Sangh, an affiliate of the Rashtriya Swayamsevak Sangh, has rejected the hike. The Indian National Trade Union Congress, an affiliate of the Congress party, has said that a hike (which on an average is 24% over the current remuneration) is the lowest increase in the past 17 years.

The BMS leadership also stated that it would start protests across the country from July 8 onwards. The central government employee unions have threatened to go on strike from July 11.

One BMS leader said that the Pay Commission recommendations would 'increase disparity between the minimum and maximum pay.' So what does he want? Increase the minimum pay even more or reduce the maximum pay? He has no idea perhaps.

I would challenge the very rationale behind the setting up of pay commissions.

If there are yearly increments and dearness allowance to take care of inflation and if the pay bands change upon promotions, then what is the need for a ten yearly pay commission?

Ideally the salary increase should be linked to achievement of pre-set targets. Wholesale salary increase isn't desirable, at least for managerial or leadership profiles. If the sales tax officer doesn't meet his targets, he need not be given an increment.

I know that the status-quoists would hide behind the subjectively and lack-of-objectivity aspects of my proposal. But these are all excuses to remain in the state of inefficient but comfortable stagnancy.

It is well known that at the lowest salary levels, central government employees take home more than double the salary of the lowest level employees in the private sector. The 7th Pay Commission will just add to that difference.

Add to this the fact that workers in the private sector by and large work harder, have more accountability and face worse working conditions as compared to workers in the central government. Non-government employees have reason to feel left out.

I believe that the hike to government employees will be indirectly passed onto the working class by way of increased taxes -- direct and indirect.

Central government employees get government housing or adequate allowances.

The Central Government Health Scheme covers their medical needs adequately.

They have confirmed pensions and it gets extended to their surviving spouse, after they have long gone.

The employees enjoy leave encashment, leave travel compensation, state insurance and gratuity.

They get study leave and medical leave and God knows what all kinds of leave.

At the higher echelons of the bureaucracy, they never even retire as they get themselves appointed to some post retirement committees.

Although I am averse to generalising, by and large I can say that central government scientists don't produce any valuable research, the police officers don't carry out prosecutions with any vigour, the tax officials don't prosecute but indulge in lot of unlawful persecution, the policy makers don't do serious policy making and the secretaries do little except nodding happily at their political masters.

Government teachers teach more of the same stuff every year and supplement their income by taking private tuitions.

Government engineers like to work only when they are posted on 'fertile' projects. Send them to the planning division and see how they moan.

The doctors want to work only in CGHS dispensaries in the metro cities.

Government officers resist transfers to far flung places and given any opportunity aren't averse to indulging in petty corruption.

So I am not at all surprised that to them Rs 102,000 crore looks like crumbs.

I asked a serving government officer recently if he could tell me from where the money would come. Would the money to pay for their increased salaries and pensions come from reducing capital expenditure or from raising taxes? What about the impact of this huge outflow on the fiscal deficit?

He shook his head, in anger first and then in frustration. He was angry at me for asking him this question.

"Who the hell are you? Are you the finance minister? Are you not a columnist with more than just a tinge of envy in your small heart?" he asked. I was stunned at the response.

I knew that this officer was frustrated as he knew nothing about capital expenditure or the fiscal deficit.

I want government employees to take the largesse bestowed upon them. They don't deserve it in the first place in a free market world. No one in the world deserves a pay hike if it isn't linked to her/his performance.

A pay hike is justified if the targets and met. The days of across-the-board salary hikes are over. Even if one works for the government.

And to Randeep Surjewala of the Congress who is shaming the Modi government for proposing a measly hike, I have two things to say.

This Commission was appointed by the United Progressive Alliance government and doesn't take the Modi government's clearance before making its recommendations.

And if he wants to give a 54% hike to government employees, as the UPA did in 2008, he should propose it for the state government employees of Karnataka, Himachal Pradesh and Uttarakhand.

His chief ministers shouldn't go to Arun Jaitley with begging bowls afterwards to bridge the fiscal deficit.

Sudhir Bisht, a New Delhi-based writer, tweets @sudhir_bisht

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