A balloon of benefits

A balloon of benefits
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First Published: Mon, Mar 31 2008. 12 39 AM IST
Updated: Mon, Mar 31 2008. 08 56 AM IST
Even after a week of considerable discussion about the Sixth Pay Commission report, the media is still not very sure whether to laud or castigate it. There have been comments about the additional fiscal burden, comparisons with the private sector, the relevance of performance incentives, et al, but the media has been careful not to take on the bureaucracy by asking what the public will get in return. It has even accepted the costs to the Centre of about Rs30,000 crore in 2008-09 as inevitable.
Concern with retention at middle management levels is visible in the report. There has been evidence of flight of officers to the private sector after putting in 10-15 years in government, leveraging their knowledge of processes and people to command a huge multiple of earnings in their new assignments. There have also been reports that the defence forces are finding it difficult to recruit officers, with managerial skills in demand in the real economy. The recommendations of the pay panel provide for a bulge in the benefits at these levels, in the hope of improving parity between the private and government sectors. Building on this platform, my ex-colleagues at senior levels have ensured there is enough gravy for them, as well (I do hope to get a good raise in my pension).
Thus, the balloon of benefits is larger at the middle and top end.
It’s more subdued at the lower end. The class of stenographers, the backbone of the notes and minutes that remain unchanged from the days of Curzon, is being done away with. The minimum–maximum ratio is being stretched from the present level of 1:9 to about 1:12, with lower benefits at the clerical and lower levels. There is little for the entrants, and indeed, at entry levels, several tasks are being removed. There is a strong recommendation for outsourcing lower-level service tasks. In this sense, the report is certainly elitist for, like the government and the important policymakers, it pays lip service to inclusive growth, but is tilted towards the upper end of skills and knowledge.
The government has paid little attention to job opportunities in the real economy. It’s recognized that mere literacy is not enough for skills creation, that there is a severe shortage of even ordinary skills needed in services, construction and manufacturing—but there’s been no coherent strategy to attempt to bridge the gap. There are many committees in this government, but none to tackle the problems of employment and livelihoods.
This pay commission report, to my mind, is yet another example of this bias towards the knowledge economy, the middle class and senior managers, the demand for FMCG and urban allowances. The small town aspirant, the first- generation school graduate, has little to look forward to. This is worrying at a time when we urgently need to take people off farms into service jobs, reduce pressure on land, and to move youngsters to service jobs.
There are other recommendations that may get distorted during implementation — such as the proposal to allow a higher (3.5%) rate of increment to 20% of the employees, categorized as “high performers”. It is tough to evolve measurable criteria at clerical levels. There will always be complaints of favouritism, of lack of transparency and recourse to RTI against these decisions. The running pay scales are unlikely to satisfy the demands for promotions, for elevations in government service bring substantial power and additional responsibility. The increases in education allowance and house rent allowance are marginal when compared with the rise in the costs of these services. It is not clear whether the medical insurance scheme aims to reduce the ambit of the Union government health scheme — if so, there would be substantial cuts in benefits for employees.
The position of the commission on the new pension schemes is not clear — it uses the words “new pensioners”, but since 1 January 2004, new entrants are on a contributory pension programme. Reductions in gazetted holidays may be seen as erosion of benefits. Lateral entry at higher levels, even in professional services, may not be welcomed. There are several such recommendations that may become subject to further negotiations between the government and employees before they are implemented.
At a conceptual level, the report fails to address the issues of service delivery. The incentive mechanisms are small: There is little to improve efficiencies or to punish inefficiencies. The running pay scales could be viewed by the public as yet another incentive for non–performance. Surprisingly, the Administrative Reforms Commission and the pay commission don’t seem to share views about improving processes and output measurement.
The report is, at best, a human relations exercise to keep the employees appeased in an election year.
One could consider it an opportunity missed to address fundamental issues in how the public services function, and to reward performance and castigate nonperformance.
Finally, it is not clear whether even at middle-management levels, the report will ensure loyalty and retention when compared with the incentives in the private sector.
S. Narayan is a former finance secretary and economic adviser to the prime minister. We welcome your comments at policytrack@livemint.com
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First Published: Mon, Mar 31 2008. 12 39 AM IST