Economic Highlights

New Delhi, 4 July, 2016

Govt Model Employer, But

 WHO WILL TAKE CARE OF PVT SECTOR?

By Shivaji Sarkar

The Rs 80,000 crores pay hike bonanza to Central Government employees will benefit over one crore employees and pensioners. Importantly, it would not end here as the States too have approximately the same number of staff. Consequently, another Rs 80,000 crores would be doled out to them subsequently.

Add to this, family members of the employees it totals benefits to eight crores people, 6.6 per cent of the population. But it needs to be underscored that the entire Rs 1.6 lakh crores would not go as family income as a sizeable amount, almost Rs 40,000 crores would return to the Centre as income tax and at least another Rs 4,000 crore to States, as many of them levy profession tax.

Notably, adjusted to inflation and heavy tax deductions, the real hike per employee would is not a bounty as it appears. At the upper end the high-paid employees might have more surpluses but those at the lower-end would be paying higher taxes and in actuality might take back home less.

Undoubtedly, this calls for a relook at our income-tax policy. One, do we really have so many employees on roll? If one goes by the 2011 census, the total number of Central Government employees is around 31 lakhs.  Besides, the number of employees in States in the census is far less than the numbers projected now.

True, except some recruitment largely in the security forces, not many have been put on rolls as there is a sizeable number of casual and contractual appointments. Sadly, they would not be beneficiaries of the Seventh Pay Commission’s bonanza.

Besides, the Government might have estimated a higher payment amount than is really needed. Bluntly, both the Centre and States would not have to pay the earmarked Rs 80,000 crore. It would be far less.

Undeniably, the hike has caused heart-burn among private sector employees. True, the Pay Commission states it has tried to have parity with corporate salaries. Is that true? Not really. Except for a miniscule of people at the top rung, corporates are not paying high wages.

Alongside, except for a few large corporates, many are not paying even what is due to an employee! Whereby, the Government wage hike, though apparently a benevolent move, is creating severe social disparity.

Think. The average corporate wages in our country vary from Rs 7,000 to 40,000 per month. This is so even with the highly reviled software companies. In most cases, the employees are often not paid their last month’s wages, if they leave or are sacked.

Moreover, their wages are also not inflation adjusted. Often, the hikes that the corporates announce are adjusted against a supposed higher work target. And the employees are penalised for falling short of it wherein workers suffer the ignominy of wage cuts.

In addition, an employee is often transferred to a new location every three to four months by many corporates, particularly those in the software or business service industry. But the employees are not paid anything extra, except the actual transport expenses.

They have to hire accommodation on their own, notwithstanding they might be having accommodation at the “official” place of posting. So there is wage erosion as an employee susidises the operations of his employer.

Even in private education institutions be it a primary, secondary or higher learning colleges, the faculty and employees, despite so called UGC benchmark, hardly ever get proper wages.

Scandalously, in many cases, the employer keeps their first month salary as “security” without giving any written receipt. Many others pay through the bank an amount but asks them to return 15 to 20 per cent, sometimes more, in cash to the employer.

Furthermore, smaller companies are not following any formula for wages. It all depends on their needs and hire and fire is the rule. The employee is often expected to work without pay once a notice has been served to him. Gratuity and other benefits are mostly anathema in such institutions.

Alas, as labour unions have been weakened and employers emboldened, there is little succour for the workers.

Moreover, it is good that the Government remains a model employer. Specially against the backdrop of total inflation being around 47 per cent since 2010 – an average of 8 per cent a year. This has caused major erosion of wages necessitating this pay revision.

Pertinently, if private sector employees are not compensated for this erosion of wages, it is a cause for concern for the Indian society. As it is reflective of either myopia, profiteering vision of the private sector or depicts that the economy is not in that bright a spot as is being projected by the Government despite its efforts, projects, allocations and investments.

There is also a suggestion, largely from private employers, that the Government should not increase the wages of the employees. This might be a good suggestion for their profiteering. But they cannot go on increasing prices and ask the Government to punish the employees for the folly of the private sector.

Definitely, this is a serious issue. Questionably, if some societies like the US can do with a mere 6 per cent wage hike since 1960, why cannot India? Then the country would also have to learn to manage prices as the Americans do.

Unfortunately, India does not have a regulatory system. The MRTPC has been dispensed with, the Competition Commission is hardly an effective body and other State mechanisms do not work.

Alongside, corporates hike prices without rationale as profiteering is their rule. Never mind, the common man and workers suffer.

The time has come for the Government to review prices as also the work system in the private sector. It cannot be left to market forces and payment of wages appropriately to those working outside the Government. The Administration cannot take satisfaction in being a model employer for its direct employees alone.

In sum, it owes equal responsibility to all citizens, wherever they might be working as wage disparity and joblessness finally recoils on the Government. Therefore, it has to take suitable steps so that workers anywhere are paid proper need-based wages.

True, disparities might not have visible repercussion in the immediate context. But in the long run, these could cause severe societal strains. Giving a wage hike to Government employees is good. But the benefit must be equitably distributed and the private sector should be forced to do it also for good governance.

All in all be it wages or checks on prices, the Government or NITI Aayog must do a holistic study. ----- INFA

(Copyright, India News and Feature Alliance)