The Rs 80,000 crore pay hike bonanza to central government employees is to benefit about one crore employees and pensioners. It would not end here the states also have approximately the same number. So another Rs 80,000 crore would be doled out to them subsequently.
Roughly it would benefit about eight crore people, who are the family members of the employees. In other words it benefits 6.6 percent people.
But it needs to be understood that entire Rs 1.6 lakh crore would not go as family income. A sizeable amount, almost Rs 40,000 crore would go back to the centre as income tax and at least another Rs 4,000 crore to states, as many of them levy profession tax.
Adjusted to inflation and heavy tax deductions, the real hike per employee would not be such a bounty as it appears. At the upper end the high-paid employees may have more surpluses. Those at lower-end would be paying higher taxes and in actuality may take back home less.
This calls for a relook at the income-tax policy.
But do we have really so many employees on roll. If we go by the 2011 census, the total number of central government employees were around 31 lakh and similarly the number of employees in the state were also far less than the numbers projected now.
It is well known that except some recruitment largely in security forces, not many have been put on rolls. But there has been a sizeable casual and contractual appointment. Sadly, they would not be beneficiary of the bonanza. The government may have estimated a higher amount for payment than it is really needed. It means whether the states or the centre would not have to pay the earmarked Rs 80,000 crore. It would be far less.
The hike has also caused heart-burn among the employees in the private sector. The pay-commission says it has tried to have parity with the corporate salaries. Is that true? Not really. Except a small people at the top rung, the corporate is not paying high wages.
The corporate, except the few large ones, are not paying even what is due to an employee. The government wage hike, though apparently a benevolent move, is creating severe social disparity.
Average corporate wages in India vary from Rs 7,000 to 40,000 a 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. Their wages are also not inflation adjusted. Often, the hike that the corporate announce are adjusted against supposed higher work target. They are penalised for falling short of it – the workers suffer wage cut.
Besides, an employee is often transferred to new location every three to four months by many corporate, particularly those in software or business service industry. But the employees except actual transport expenses are not paid anything extra. They have to hire accommodation on their own, though they may be having an 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. 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 and asks them to return 15 to 20 percent, sometimes more, in cash to the employer.
The smaller companies virtually are not following any formula for wages. It depends on their needs. Hire and fire is the rule. The employee is often expected to work without pay once a notice has been served to them. Gratuity and other benefits are mostly anathema in such institutions.
As labour unions have been weakened and employers emboldened, there is little succour for the workers.
It is good that the government remains the model employer and announces. Total inflation since 2010 is around 47 percent – an average of 8 percent a year. It has caused major erosion of wages necessitating this pay revision.
If private sector employees are not compensated for this erosion of wages, it is a concern for the Indian society. It reflects either the myopic, profiteering vision of the private sector or depicts that economy is not in that bright spot as it is tried to be projected despite government 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. It may 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.
It is definitely a serious issue. If some societies like the US can do with a mere 6 percent wage hike since 1960, why cannot India do it? Then India would also have to learn to manage prices as the US does.
Unfortunately, India does not have a regulatory system, MRTPC has been done away, Competition Commssion is hardly an effective body, other state mechanisms do not work. Corporate hike prices without rationale. Profiteering is the rule and the common man and the workers merely suffer.
It calls upon the government to have a review of the prices, 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 government cannot take the satisfaction of being a model employer for its direct employees.
It owes equal responsibility to all citizens, wherever they may be working. Wage disparity and joblessness finally recoils on the government. It has to take suitable steps so that workers anywhere are paid proper need-based wages. Disparities may not have visible repercussion in the immediate context. In the long run, these can cause severe societal strains.
Giving wage hike to government employees is good. But the benefit must be equitably distributed and private sector should be forced to do it for good governance. On wages and checks on prices too the government or NITI Ayog must do a holistic study.