Shivaji Sarkar
The Rs 80,000 crore pay hike bonanza to government employees will benefit about one crore employees and pensioners. However, it does not end here as the States too have approximately the same number of staff. Consequently, another Rs 80,000 crore will be doled out to them subsequently. In other words, about 6.6 per cent people will benefit from this pay hike. But it needs to be understood that entire Rs 1.6 lakh crore will not go as family income. A sizeable amount, almost Rs 40,000 crore will go back to the Centre as Income Tax and at least another Rs 4,000 crore to the States, as many of them levy profession tax.
Notably, adjusted to inflation and heavy tax deductions, the real hike per employee is not a bounty as it appears. At the upper end, high-paid employees may have surpluses, but those at the lower-end will pay higher taxes and in actuality, may take back home less.
This calls for a re-look at our Income Tax policy, but do we have so many employees on roll? Going by 2011 Census, the total number of Central Government employees were around 31 lakh. Besides, the number of employees in various States were far less than the numbers projected now.
It is a well-known fact that except some recruitments largely in security forces, not many have been put on rolls as there is a sizeable number of casual and contractual appointments. Sadly, they will not be beneficiary of the Seventh Pay Commission’s bonanza. Besides, the Government might have estimated a higher payment amount than what is really needed. This both the Centre and the States would not have to pay the earmarked Rs 80,000 crore. It would be far less.
Undoubtedly, the hike has caused heart-burn among private sector employees. The Pay Commission has stated that 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. Except for a few large corporates, many 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 our country varies from Rs 7,000 to Rs 40,000 per month. This is so even with highly reviled software companies. In most cases, if an employee leaves or is sacked, he is often not paid his last month’s salary. 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.
Even in private education institutions, be it a primary, secondary or higher learning college, the faculty members and the employees, despite the so-called University Grants Commission benchmark, hardly gets 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 but asks them to return 15 per cent 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. It is good that the Government remains a model employer, especially against the backdrop of total inflation being around 47 per cent since 2010 – an average of eight per cent a year. This 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.
The Government must review the working system in 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. Giving wage hike to Government employees is good, but the benefit must be equitably distributed and the private sector should be forced to do it for good governance.