A Miserable 2 Per Cent - Article by Sri. Vinodh Rai on 7th CPC
On 30, headlines
across newspapers were on the Union government having approved the Seventh Pay
Commission recommendations. The Economic Times headline read, "Central
staff hit pay dirt: An early Diwali". The newspaper said the government
had accepted the recommendations doling out 'hefty' pay hikes. The salaries
were expected to increase in the range of 14 per cent to 23 per cent. The bold
fonts also announced that the lowest salary was to increase from Rs 7,000 per
month to Rs 18,000. The highest salary, received by the cabinet secretary, was
to go up to Rs 2,50,000 from Rs 90,000.
Sounds huge, does it
not? But we need to analyse this. What is the bonanza and what are the hefty
pay hikes which are speculated to be “fueling inflationary pressures"?
Actually, the salary
of Rs 7,000 and Rs 18,000 are not comparable. The equivalent of the Rs 7,000
basic salary, which was fixed 10 years ago and currently applicable with the
dearness allowance added on, is Rs 15,750 (Rs 7,000 basic plus 125 per cent
DA). In the salary of Rs 18,000 now announced, the DA is subsumed. Thus, a more
accurate comparison would be the present salary of Rs 15,750 and the new salary
of Rs 18,000. Similarly, the cabinet secretary at present receives Rs 2,02,500.
The newspapers also announced that the total outgo as a consequence of the hike
was expected to be Rs 1 lakh crore.
The comments on
social media are more expressive! They question whether government employees
actually deserve higher salaries: "Being paid more for what?",
"More pay for less and less work", and "Babus don't deserve a
hike." In fact, it is speculated that these increases will fuel inflation.
Another school of thought believes that it will kickstart spending, thus
generate demand and hence increased economic activity.
The Pay Commission is
announced once in ten years. Thus any increase in basic salary comes about once
in ten years. Even if we were to assume that this Pay Commission has brought
about a hike of 20 per cent, it would tantamount to a simple rate of 2 per cent
per annum. Which employee in the private sector would be content with a 2 per
cent per annum hike? A couple of years ago, I was pleasantly surprised to hear
of the bonus received by one of the youngsters in the family. I found that his
annual bonus alone was more than the sum of the total salary earned by me over
my entire career! He could afford at least two vacations abroad for himself and
his kids every year, travelling business class. My wife and I have never been
on any vacation as yet. At most, every year we visited our parents using up my
earned leave or she would accompany me if I travelled on work. For him the
weekend is a total break from work—he gets no official calls over the weekend.
Mine was a 24x7 job when I could not refuse anyone who called me. Once when my
wife reminded the caller that he had called on a holiday, he had the gumption
to remind her that official phones were given to government functionaries so
that they could be contacted all the time!
There is then the
fear that the pay increase will cause financial difficulties to state
governments. True, it will. However, prudent financial management requires
constant mobilisation of resources. However, considering the fact that we have
just about an election every year, to local bodies or state legislatures or the
general election, very few governments can take appropriate measures to
increase taxes or tap methods to raise resources. If you cannot take harsh
decisions to raise resources, why blame government employees who get a paltry
increase of 2 per cent per annum?
I acknowledge that
government employees are not the most popular guys. To a large extent, we are
to blame for this. This perception needs to be addressed and only we can do
that with our own endeavors and actions. However, if the general public still
continues to grudge the paltry increase, they must realize that if you pay
peanuts you get only ..........!