The Sixth Pay Commission - For Whom, Who Pays

by Indra

Aug. 4, 2006

The Sixth Pay Commission (SPC) is already a reality. And unlike other commissions, if it doesn’t expand it work, it will submit its report in January 2008. And to please the most influence class in the society, the government will have to take the extra burden even if without any rationality as it happened with the Fifth Pay Commission (FPC). Election is due in 2009. The government will have to bow to the pressure of the government employees. Was the decision of SPC the masterstroke of the UPA that can tilt the influential million towards the UPA?

As reported, a person as responsible as T.S.R. Subramanium, the Cabinet Secretary, the implementer the Fifth Pay Commission (FPC) in 1997 says, "The timing of the decision is interesting. The Government seems to be gearing up for the next elections."

The government could have skipped and concentrated on the nation building programmes of infrastructure, education, and healthcare. In 2000, the Eleventh Finance Commission had categorically talked in the same language. As per it, there is no need to routinely set up pay commissions, because it proves disastrous for finances of states.

Who all and how share the total wage bill of the government employees that amounted to Rs 51,000 crore of 2005-06? The total employment in the government (including the public sector) is 18.6 million- 3.1 million in the Centre, 7.4 million in state governments, 5.9 million in quasi-governments and 2.2 million in local bodies. (Some 400 million of Indians work outside the government.)

Rs 46,920 crore went towards paying 28.16 lakh Group C and D government workers, including stenographers, assistants, constables, drivers, and gardeners. As one columnist writes, that's enough money to set up 47 new IITs.

Why can’t this category constituting 88 per cent of the Government's workforce be pruned after one-time compensation, computerization, and ITeS or outsourced to bring in better efficiency?

Surprisingly, the Group A (IAS, IPS) constitutes less than 3 per cent and Group B (IT officers, ACPs) 9% of the total government workforce and accounts for only 8 per cent of the total wage bill. And a cabinet secretary takes home about Rs 30,000 a month. Perhaps that is the salary of a call center employee with three years' experience today. Is it not the reason for the so famous red tape and corruption level in the groups?

The SPC and the government must rationalize the strength of the employees. It must do every thing to cut down levels of the organizations. What the SPC needs to do is rationalise government expenditure on emoluments? Many of the government departments must go. Why does every state need so many boards for education from to professional levels? Perhaps the biggest problem is the lack of an effective incentive system that can differentiate between the productive employees and the non-productive ones. While the present system does not provide any incentive for an efficient and hardworking employee, the non-productive ones go on getting the same salary, perks, and increments as the productive one gets

Interestingly, the FPC had recommended certain conditions to compensate the huge salary burden because of the minimum increment at 20 per cent (though the United Front Government had to raise it to 40 per).

• The workforce was to be downsized by 30 per cent over a decade
• 3.03 lakh posts lying vacant were to be immediately abolished
• The number of government holidays in a calendar year would be reduced.

The SPC would have come only after the implementation of the conditions. The country can’t any more bear the slowdown of GDP because of SPC’s recommended burden (GDP growth fell from 7.5 per cent in 1996-97 to 4.3 per cent in 1997-98.) The history and the coming generation will not forgive this, if it goes on recommending populist measures. It shouldn’t again lead to doubling of the wage bill (The Centre's wage bill of Rs 21,885 crore in 1996-97 had almost doubled to Rs 43,568 crore by 1999-2000). As Bibek Debroy, the economist, warns, SPC must not reward 30 million people at the expense of 400 million people.

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