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Whatever the merits of the two views, the government has power on its side. Every once in a while, it appoints a Pay Commission to award its employees a handsome pay rise so that they can catch up with the private sector. One has been sitting for two years, and would be getting ready to announce its award.
If it has read the last Pay Commission’s report, it must know that public sector salaries have already caught up with those in the private sector, and are in fact higher than private-sector salaries for low-paid categories. If matching the private sector were the criterion, the salaries of these categories would deserve to be reduced. If that is considered unrealistic, the best that they deserve is maintenance of their real pay — that is, pay rise in proportion to the rise in the cost of living. It is hardly likely that a government commission appointed to recommend spending of government money will be that frugal; but whatever it rewards beyond this is a bonanza.
However, public sector trade unions are so powerful that it is unrealistic to expect the Pay Commission to be rational about pay increases for the lower categories. It is the higher categories that still earn less than those in the private sector. Of course, it matters to whom they are being compared. If they are compared to the top managers of the biggest companies, they do come off worse. But there are many smaller companies that do not pay their managers nearly so well. And government servants certainly do not face the risks of unemployment that private sector workers do.
Still, a case will be made by various service associations on behalf of their members, and the Pay Commission will listen to them. The only policy issue that can still be made at this late stage is that the Pay Commission should make a distinction between the government offices that face competition in recruitment from the private sector and those that do not. There are, on the one hand, the services, such as the Indian Administrative Service, which face no difficulty in attracting enough applicants, and which recruit on the basis of reservation and such antiquated criteria. They hardly deserve better pay. Then there are government institutions that need professionals recruited on merit; their pay does need to match the private sector.
A case in point is the Patent Office. Between 1 January 2005 and 30 November 2007, it received 80,574 applications, and issued 400 patents. It is clearly failing to do its job; if it continues to perform so poorly, it would make little difference if it was abolished. It has done so badly because it is working with 10 per cent of its authorised staff strength. It needs technically proficient professionals; it finds it difficult to recruit people of acceptable quality, and those that join it soon depart for greener pastures. Its pay obviously needs to be comparable with the private sector.
This is true of the research laboratories as well. Government laboratories, especially the central ones, have the scale to do research of international standards. Many possess expensive experimentation facilities that the private sector cannot afford. This magnificent infrastructure has been going waste in recent years because scientists have been lured away by the private sector. Great science and technology cannot be created with mediocre government salaries; comparability of pay is crucial here.
(Businessworld Issue 19 February-25 February 2008)