Salary hikes for Government & Defence employees- what’s the big deal?

The 6th Pay Commission, headed by Justice Srikrishna, has proposed an upward revision in the salaries of central government employees as well as those serving in the armed forces. Note that this is only a proposal; it is upto the government to accept the proposal in toto or in a modified form. Already, the media is going to town, tom-tomming the news about a 40-100% hike in salaries.

Comparisons are always odious, and the comparison between the salaries and perks of government officers and private sector executives is no less so. A leading TV channel commented that a senior IAS officer in Delhi enjoys the benefit of living in a bungalow in a prime location, and valued this at Rs40 lakhs per month in terms of rent. That figure may well be the going rental. But does the private sector also not offer its CEOs and MDs large, furnished flats in Malabar Hills or Carmichael Road in Mumbai? In both cases, the key point being missed is that most of these properties were leased or purchased years ago, at a fraction of the current market value.

The other point that I thought the media missed is the fact that annual compensation increases in the private sector can be as high as 100% (if you also consider bonuses, profit-sharing etc.), while the government pre-specifies the “salary scale” and thus caps annual increments. Of course, government servants enjoy DA, free use of a car and driver, telephone etc. And the “status” or “power” and pelf they enjoy just cannot be monetized. Who else can keep an Ambani or Birla waiting but a senior government official? But do not forget that the private sector is free to revise its C&B even more often than once a year, whereas the Pay Commissions present their recommendations only once every 5 years or so- during which time, the gap between private sector and government salaries keeps widening. There is also, of course, the reality of inflation.

Personally, I think the government must accept these recommendations, if only to attract and retain talent. An exodus, especially of mid-level bureuacrats, can cripple the entire administrative machinery and hence hamper policy formulation and implementation. It is also important that the government sector attracts talent so that we as a nation benefit from good governance, innovation in policy-making and so on. Finally, if the “legal “compensation offered is attractive, one hopes that the bureaucracy’s tendency to seek bribes will also diminish.

Of course, the question of a “secure job” in the government vis-a-vis the “hire-and-fire” culture of the private sector, given its “peformance” expectations is a completely different story altogether. And let me also add that government salaries are paid at least in part by taxes collected from the private sector!