Jul 2, 2016

7th Pay Commission: How salary disparity explains brain drain from govt

At the press conference held to give the details about the Seventh Pay Commission, finance minister Arun Jaitley cited an IIM-A study to drive home the point that the government staff is indeed getting higher if not same salaries at the similar experience levels.
Interestingly, the same study has proof that the government servants are paid less at the top level, which may be the reason for the brain drain to the private sector from the public sector.

The IIM-A study was done for the Seventh Pay Commission and its purpose, in the premier educational institution's own words, was "to provide comparative analysis of salaries/emoluments in the government sector vis-à-vis central public sector undertakings/ private sector in India." (The study, which is available online, does not take into account the Seventh Pay Commission recommendations or increments.)

The study has been conducted on the salaries of nurses, physiotherapists, lab technicians, doctors (MBBS), doctors (MD/MS), dieticians, OT assistants, radiographers, teachers (PRT), teachers (TGT), teachers (PGT), principals (HS), scientists, technical staff (railways), account officers, graduate engineers, software developers, network engineers, system analysts, programmers, data entry operators, foremen, draftsmen, electricians, plumbers, welders, drivers, store-keepers, cashiers, clerks, library staff, secretarial staff, publicity staff, photographers and cameramen, receptionists, gardeners, and general helpers.

It is citing this study that the finance minister asserted at the press conference that a government helper gets Rs 22,579 monthly, which is more than 2 times the wage of the private sector counterpart.

This is indeed true. Take a look at the table below:

It shows wide variation in the salary levels of the private sector and public sector staff. Out of the 20 categories mentioned in the table, only in three cases government salaries are lower.

For as many as 17 categories the government salary is higher than the private sector counter part. The widest variation can be seen in the case of data entry operators (25 years of experience) , in whose case the government salary goes up to Rs 86,482.

In the private sector, the top salary for a data entry operator (10 years of experience) is just Rs 21,000. So also is the case of general helper. Here the government salary goes up to Rs 73,739 as against the private sector salary of Rs 28,000. Precisely, this is what the finance minister was mentioning at the press conference.

But then there is a catch: the sample jobs taken for the study doesn't include many top level categories, where the private sector salaries are much higher than the government salaries. Neither does it mention why it didn't take these categories.

"Initially, we identified a comprehensive list of sample job roles which are relevant for our study through a consultative method. Final job roles were identified in consultation with the Seventh Central Pay Commission," the study says in the executive summary. This doesn't exactly explain why the top level pays were kept out of the study's purview. And it is here where the skew is huge in favour of the private sector.

For instance, take the banking sector. In the last financial year, the chairman of State Bank of India drew a salary of Rs 31 lakh per annum, while Chanda Kochchar, managing director and CEO of its private rival ICICI Bank, drew a salary of Rs 4.8 crore per annum. SBI's total assets as of March 2016 stood at Rs 20,48,080 crore as against ICICI Bank's Rs 7,20,695 crore. However, the top paid executive in the Indian banking sector was Aditya Puri, managing director of HDFC Bank (total assets Rs 7,08,846 crore), who received Rs 9.73 crore per annum.

The numbers given above clearly say why the top government bureaucrats are not really happy about the Seventh Pay Commission implementation 

In its concluding remarks, the IIM-A study says: In most of the roles studied here, salaries across Government and CPSUs are in similar range. In many of the roles studied here, government is paying higher salaries compared to the private sector, particularly in initial years, for jobs at the lower levels of skill requirement and hierarchy. Salary in government is relatively lower compared to the private sector, particularly in later years, for some highly skilled jobs.

This is one area the government needs to address urgently. And it is not about equal pay, but equitable pay

SOURCE - first post