Monday, October 1, 2007

Debate on Pay


Manishinath Bhawan,

A-2/95 Rajouri Garden,

New Delhi. 110 027.

Dated: 1st October, 2007


Dear Comrade,


            We place hereunder the two articles that appeared in the Financial Express today. The subject matter of discussion was  :should the Government salary be at par with the private sector:  We were asked to respond to this question.  Our article has come in its full form.


            The Government has today announced the raising ceiling limit for calculation purpose of Bonus from Rs. 2500 to Rs. 3500 a month.   The UNI news in this regard is published hereunder.  It requires another order from the Ministry of Finance for those who are in receipt of adhoc bonus and from the concerned Ministries in the case of PLB. In the case of Govt. has already issued the bonus order without raising the ceiling limit. This order will require to be revised.   In the light of the decision of the Govt. we hope that the bonus in the case of Postal, Defence and railway employees and others in whose case, the bonus order is yet to be issued, will get the benefit of increased bonus this year itself.   The Confederation will take steps to get the "adhoc bonus" order revised on seeing the order in the case of PLB.


            UNI  News:

New Delhi. Oct. 1. (UNI) The Centre today brought the employees in the construction sector under the Bonus Act and raised the eligibility limit for payment of Bonus from Rs. 3500 to Rs. 10000 a month and the ceiling for calculation purpose from Rs. 2500 to Rs. 3500 a month. The decisions were taken at a meeting of the Cabinet chaired by the Prime Minister Manmohan Singh, Labour Minister Oscar Fernandes and information and Broadcasting Minister Priya Ranjan Dasmunsi told reporters.




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Print Story

Growth has made pay parity possible
KKN Kutty
Posted online:
Monday , October 01, 2007 at 0024 hrs

A wage is considered the product of collective bargaining reckoned with reference to the productivity and profits of an enterprise. Trade unions play a vital role in making the bargain effective from the workers' standpoint. In the case of government employees, though the right to form associations is afforded, the right to strike is denied.

Having thus shut out collective bargaining, the periodical wage revision for government employees had been—and continues to be—through the Pay Commission. Even before the Royal Commission (presided over by Raymond Priestly) on UK's civil services propounded the theory of "fair comparison" as the primary principle of wage determination, the First Pay Commission set up by the colonial rulers in the wake of the phenomenal price rise in the post-war economy of our country, had advocated that a fair relativity should be maintained between the rates of pay of civil servants and outside rates, with a caveat that in no case should pay be less than a living wage.

The Second Pay Commission, which came into existence in 1957-59, asserted further that comparison should be with the rates of remuneration in enterprises in which personnel problems, viz, recruitment, condition of service etc, are dealt with in a systematic manner. The commission went on to suggest that while at the lowest level, the socio-economic necessity of providing a fair wage or a living wage is to be adhered to, with regard to the highest salaries, retaining persons with requisite talent and qualifications must be an important criterion. The commission approvingly quoted the dictum incorporated in the First Five-Year Plan report that the "wages in public undertakings should not be less favourable than those prevailing in the neighbouring private enterprise".

It is also pertinent to note that the Royal Commission was of the view that "fair comparison" as the primary principle of wage determination is not only fair to employees but also to the community at large. For, if the government, which represents the interest of taxpayers, pay what responsible employers pay for comparable work, citizens cannot reasonably complain that they are being exploited.

Having stated this laudable principle of wage determination, none of the pay commissions translated it into reality. The 15th Indian Labour Conference (ILC) resolution on "need-based minimum wage", basing upon the Dr Aykroyd formula of a net intake of food which provides 2,700 calories for an average Indian adult of moderate activity, was deliberated at length by the Third Pay Commission and discarded.

It is the bounden duty of the government to provide the "need-based minimum wage" computed on the basis of the 15th ILC norms at the lowest level of the government hierarchy, given the fact that the country's economy has registered a growth rate of 8-9% in recent years and its revenue has gone up considerably, whereby the wage bill as a percentage of tax revenue has come down to 9% today from 21% in 1997-98.

In the matter of salaries at the highest level, the government has to be guided by the requirement of retaining persons with talent, ability and qualifications needed for a highly complex job. Some of the large corporate houses in the country pay exorbitant salaries to their executives. This has led to personnel at various levels in government service migrating in search of the fabulous monetary benefits offered by private entrepreneurs. While it would be inadvisable to disregard this fact, the government's decision in the matter will have to be tempered with the equally important requirement of maintaining a reasonable ratio between the minimum and maximum salary. The principle of wage determination for government employees has undoubtedly to be the basis of a fair comparison of wages obtaining in private and public sector undertakings.

The writer is secretary-general of the Confederation of Central Government Employees & Workers





Print Story

Consider the perks & job security, too
Alakh N Sharma
Posted online:
Monday , October 01, 2007 at 0026 hrs

Globalisation and the consequent stiff competition in the labour and product market has led to a demand from several quarters for the need to have parity in pay and allowances between government/ public sector jobs and those in the private sector. It is argued that in the absence of such parity, there will be a flight of talented and competent manpower from government to private sector, seriously eroding the efficiency of the former. Such a trend is already visible to some extent.

Although it should be admitted in general that such a challenge might exist in a few sectors, such an argument has serious limitations, and is in fact dangerous at this stage of our development. First, the nature of a government job is overwhelmingly that of public utility and non-commercial. That is why such jobs are mostly treated as services and hence the nomenclature 'Indian Administrative Service', 'Indian Foreign Service', etc. Most public utilities are heavily subsidized by the government (and, hence, taxpayers' money).

In such a situation, it would be erroneous to treat these jobs in the same category in those in the profit-making private sector. This also suggests that while selecting people for government and public sector jobs, the spirit of service should be kept in mind. However, a distinction may be made between public sector commercial undertakings and public utilities. While some parity in crucial jobs (not CEO) between public sector commercial undertakings and private sector may be considered, the social responsibility of the former (eg, lending by commercial banks to the priority sector, etc) should also be kept in mind.

Second, most government jobs have many other hidden benefits such as housing, shorter working hours and a higher welfare component (pension, etc). Around 90% of employees in the private sector do not get pension, whereas it is almost universal in the case of government jobs, notwithstanding recent reforms in the pension system. A secretary to the government of India living in a posh Delhi colony with several other perks cannot be compared only in terms of so-called monthly salary with private sector professionals. That is why the real difference between the two groups may not be as high as is generally thought to be. Further, it should be kept in mind that an overwhelming large percentage are disadvantaged as their counterparts in government.

Thirdly, there is almost universal security of job in the government sector, against high risks in private sector. The psychological and mental stress through which professionals in the private sector go through is enormous. Even lower middle and lower level employees in a vast majority of the private sector face extreme uncertainty.

Lastly, the very high salary and perks for a small percentage of people is also unethical as well as has the potential of leading to social unrest in a country like India with widespread poverty and where more than half of rural labourers do not get a minimum wage (which is just a subsistence wage).

And, ironically, there has been a significant growth in consumption by middle and higher income groups. Such a widening social divide is very unhealthy for Indian society and its polity. The incidence of Naxalism and violence in a vast tract of rural India is a manifestation of such acute social and economic deprivation.

Therefore, one should not loose sight of these aspects while considering an income and pay policy. There is need for a delicate balance between equity and social stability on one hand, and meeting the challenge of globalisation on the other. Hopefully, the Sixth Pay Commission will not be blindly dictated by market considerations.

The writer is director, Institute for Human Development, New Delhi


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