News about 7 the pay commission.
7th Pay Commission – Big disappointment on many counts – NK Singh
7th Pay Commission – Falls Short on Several Counts – The pay is likely to increase 16%, allowances 63% and pensions about 24%. This is less than the overall hike of the Sixth Central Pay Commission.
The Seventh Pay Commission has recommended a 23.55% hike in the pay and allowances of government employees. The pay is likely to increase 16%, allowances 63% and pensions about 24%. This is less than the overall hike of the Sixth Central Pay Commission. From January 1, these will benefit 4.8 million central government employees and 5.5 million pensioners. The minimum basic pay of central government employees is Rs 18,000 per month while the maximum is Rs 2.25 lakh per month. Its immediate monetary impact is Rs 1.02 lakh crore. This does not include the impact on the finances of the state governments.
There are, however, significant policy issues that remain under-addressed. One of the terms of reference of the commission was to “make recommendations on best global practices and its adaptability and relevance to Indian conditions”. This raises several issues concerning meritocracy, attracting and conserving domain knowledge, rationalising the size of the government, and productivity-linked wages.
On meritocracy, the key policy issue relates to compensation for the talented in the private sector. The commission had initiated a survey by IIM Ahmedabad to understand the compensation structure in the government sector relative to the private sector. The results indicated that while at the entry and middle levels the government pays better than the private sector, it falls way behind the latter in compensating the highest echelons. It is argued that government employees enjoy several non-tangible benefits such as job security, inflation-indexed salary and assured prospects of financial progression. It appears that the cost to government (CTG) or total outflow per civilian employee works out to more than three times the received salary. It is higher (3.75 times the salary) in the railways and even more so in the armed forces (four times). Hence, salary hikes are perhaps an extravagant expenditure for a developing country like India. But, this argument ignores the fact that at the top level the government competes for the same talent pool as the private sector. It is impossible for the government to match the pay hikes in the private sector at that level. This makes it mandatory for the government to have a pay commission every 10 years.
On the issue of lateral entry, the commission has, regrettably, dealt with only the lateral entry or re-settlement of the defence forces personnel in the Central Armed Police Forces (CAPFs) and civil defence organisations. The wider issue of attracting talent at middle levels within the government needs consideration. Our practice and emoluments structure inhibits domain experts from joining the government. This emanates as much from the compensation package as a mindset change. Part of the problem is a “socialist mindset”, in which we seek proportionality between the highest and the lowest without recognising that the principle of equity inhibits a compensation structure for domain skills in relation to market-based conditions.
Administrative reforms would by themselves be insufficient, given the proliferation of regulatory institutions in electricity, telecom, roads and highways, the financial sector, to mention a few. Reinvigorating the bureaucracy by inducing the best market talent needs a mix of both administrative and emoluments changes. It is important to attract experts in many spheres.
The Sixth Pay Commission had made far-reaching recommendations to downsize the government. The outcome was quite nominal. The debate has moved to ‘right sizing’ rather than downsizing. According to estimates, the central government workforce (excluding the defence forces) is likely to expand from 3.31 million in 2013 to 3.55 million by 2016. The pol.
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7th Pay Commission – Big disappointment on many counts – NK Singh
7th Pay Commission – Falls Short on Several Counts – The pay is likely to increase 16%, allowances 63% and pensions about 24%. This is less than the overall hike of the Sixth Central Pay Commission.
The Seventh Pay Commission has recommended a 23.55% hike in the pay and allowances of government employees. The pay is likely to increase 16%, allowances 63% and pensions about 24%. This is less than the overall hike of the Sixth Central Pay Commission. From January 1, these will benefit 4.8 million central government employees and 5.5 million pensioners. The minimum basic pay of central government employees is Rs 18,000 per month while the maximum is Rs 2.25 lakh per month. Its immediate monetary impact is Rs 1.02 lakh crore. This does not include the impact on the finances of the state governments.
There are, however, significant policy issues that remain under-addressed. One of the terms of reference of the commission was to “make recommendations on best global practices and its adaptability and relevance to Indian conditions”. This raises several issues concerning meritocracy, attracting and conserving domain knowledge, rationalising the size of the government, and productivity-linked wages.
On meritocracy, the key policy issue relates to compensation for the talented in the private sector. The commission had initiated a survey by IIM Ahmedabad to understand the compensation structure in the government sector relative to the private sector. The results indicated that while at the entry and middle levels the government pays better than the private sector, it falls way behind the latter in compensating the highest echelons. It is argued that government employees enjoy several non-tangible benefits such as job security, inflation-indexed salary and assured prospects of financial progression. It appears that the cost to government (CTG) or total outflow per civilian employee works out to more than three times the received salary. It is higher (3.75 times the salary) in the railways and even more so in the armed forces (four times). Hence, salary hikes are perhaps an extravagant expenditure for a developing country like India. But, this argument ignores the fact that at the top level the government competes for the same talent pool as the private sector. It is impossible for the government to match the pay hikes in the private sector at that level. This makes it mandatory for the government to have a pay commission every 10 years.
On the issue of lateral entry, the commission has, regrettably, dealt with only the lateral entry or re-settlement of the defence forces personnel in the Central Armed Police Forces (CAPFs) and civil defence organisations. The wider issue of attracting talent at middle levels within the government needs consideration. Our practice and emoluments structure inhibits domain experts from joining the government. This emanates as much from the compensation package as a mindset change. Part of the problem is a “socialist mindset”, in which we seek proportionality between the highest and the lowest without recognising that the principle of equity inhibits a compensation structure for domain skills in relation to market-based conditions.
Administrative reforms would by themselves be insufficient, given the proliferation of regulatory institutions in electricity, telecom, roads and highways, the financial sector, to mention a few. Reinvigorating the bureaucracy by inducing the best market talent needs a mix of both administrative and emoluments changes. It is important to attract experts in many spheres.
The Sixth Pay Commission had made far-reaching recommendations to downsize the government. The outcome was quite nominal. The debate has moved to ‘right sizing’ rather than downsizing. According to estimates, the central government workforce (excluding the defence forces) is likely to expand from 3.31 million in 2013 to 3.55 million by 2016. The pol.
Don't forget to click advertisement showing in blog. If you like my blog then write some comments, it will helpful to increase my rating and encourage me to write some new blog. Thanks for your support.
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