On the Whole….
Mian
Sahib had just swept the poles with his ‘overwhelming’ majority in the spring
of 1997. NEWS had arranged a high profile seminar on economy at P.C. Lahore
where ‘consequential’ personalities were invited to spread their pearls of
wisdom. Yours truly had the dubious honour of being one of them. In the last
session, Mian Sahib’s finance guru was to grace the
occasion. By chance I happened to be occupying the seat next to him. Taking
advantage of the opportunity, I asked him if he was going to show Mian Sahib the true picture of the state of the economy;
now that water is almost flowing over the bridge. With the infectious smile
permanently frozen on his face which is the hallmark of his persona, he quietly
whispered to me, “When will you grow up?”
That put me
in my place instantly. Since then I have begun to equate growing up with
abandoning a logical approach to life and donning glasses tinted with
expediency according to the time and place. I tried hard but growing up was so
full of teething troubles that I had to give up. The harshness of reality keeps
blinding my eyes since I refuse to put on rose tinted glasses; like an
imbecile.
The
reality-connect that I brought to SMEDA as the new CEO in March, 1990, caught the fancy of the new regime and
we were assigned tasks to conduct in-depth value chain analysis of various
sectors of the economy, one after another. As we kept providing data-fodder to
the ministries for their voracious appetites, SMEDA
became the proverbial willing horse to be whipped by who ever up there needed a
‘vision’ or a ‘strategy’ – those glorified buzz words for ubiquitous
‘summaries’ that should be prepared by the ministries themselves for submission
to the Cabinet or the Economic Coordination Committee or the CDWP of the planning commission for approvals. For once we
had a government leadership that wanted uncoloured vision. What happened to the
proposals is another matter because the executing bureaucracy wears glasses
dark enough to stare away at the sun without blinking.
One day an
assignment came in to assist the ‘Pensions and Pay Committee’ – a high powered
committee to look into the rationalisation of the salary and pension structures
of the government employees. This was highly complimentary to SMEDA, although nothing to do with SMEs.
The idea was that since SMEDA had put together an
efficient organisation based on good HR policies to induct motivated employees,
the GoP may benefit from the
experience.
We told the
committee to revaluate GoP’s
employment philosophy first, before going into a number crunching exercise.
Apparently the salaries of government servants had been frozen since 1994 and
this was year 2000. It had finally dawned to someone that inflation may have
eroded the ‘real’ salaries over this time and there was a need to apply some
incremental adjustment in salary structures; and so too with the pension
scales. The GoP also wanted
to incorporate some radical measures to make salary structures attractive for
high quality human resource, while conducting the exercise. Some amazing
figures came to light as we rummaged through basic data.
Anyhow, our
analysis began with employment philosophy which was a bit perplexing for most
of the bean-counters sitting around the table. Our submission was quite simple:
If you want good people you need to pay them adequately up front. Get out of
the employment generation business and concentrate on efficient staff. Private
sector employment philosophy is based on attraction, motivation and retention:
Pay for performance, environmental and creature comforts with business focus,
internal and external equity, continuous market
adjustments for inflation and very low administrative costs.
In contrast
the government’s employment policy is based on lifetime security, power
oriented – high image, low cash, no external equity, minimum relevance to
performance management, experience/time based movements, benefits packed salary
structure and high administrative costs.
We
recommended a transition strategy for moving from one extreme of the spectrum
to somewhere in the middle. That should include a hybrid of private and public
sector philosophy based on fixed term employment, no career anchors or long
term benefits, cash driven and a front end loaded package. In simple words it
meant that in place of low paid, high powered, infinitely secured and ill
equipped employees who cost twenty times more than their nominal pay, shift to
high paid, performance driven, high risk and well equipped staff that costs
exactly what shows on the salary registers. And we calculated that in net
amounts the shift towards private sector policy will not cost the government
more. A Grade 21 or 22 officer has a nominal basic salary of around Rs. 14,500 per month (take home may go up to thirty plus)
but he/she costs the government over Rs. 300,000 per
month to upkeep with all their perks and allowances. The government should
monetise all their benefits and pay them cash while tagging their employment
security to performance.
Now this
would create a major upset in the books of accounts since one head would get
inflated suddenly but that is another problem. There is a solution to that too!
Support staff (grade 16 and below) account for 95 percent of salaries. The
average ratio of officer to support staff (called entitlement) is
Then there
were other anomalies! Government pays pensions out of yearly cash account;
there is no provision of pension funds! More over, there are no accurate
projections for future growth in number of pensioners either! It is assumed
that an average retiree would draw pension for five years, where as I know at
least two families where three generations are drawing pension. When we talked
of creating a pension fund, it revealed that the back log is so huge as to make
generation of reserves unaffordable for government budget. Secondly, more
amazing, if the fund was to be created miraculously, no institution has the
capacity to absorb such an amount for investment; it would require ten stock
exchanges of
Finally
after three years, in this year’s budget the government has announced an across
the board salary rise of 15 percent for government servants. The bean counters
must have been busy for so long crunching numbers to fit into a neat statistical
order. Is 15 percent really effective? Well that’s reality.
A
statistician was asked what would happen to a person if he was put in a boiler
at 100 degrees for half an hour and then put in a freezer at minus 10 degrees
for the next half an hour. He pulled out his calculator, punched in numbers and
said, “He would be quite comfortable on the whole.”
Considering
everything, they have done well to increase the salaries, on the whole I mean.
Iqbal
Mustafa
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