Budget 2012 and PRB: Powerful cocktail

By TP Saran

As was to be expected, the reactions to the Pay Research Bureau’s report have been mixed. More people will be unhappy than happy, because inevitably comparisons will be made. Not only on absolute figures, but also on the ratios showing inequalities. As it is, the Civil Service Unions have already taken a stand: an increase of 25% in salaries, and a new PRB report.

It is clear that Civil Service pay will never be able to match the private sector equivalents. This is the case practically all over the world. The idea of giving a substantial rise to top officers so as to retain and motivate them is sound, but even if the question of retention does not apply to the lower grades, it is felt that their salaries should have been scaled up to a level that reduces significantly the inequality between the top earners and those at the lower end of the scale. For example, in the case of a clerical officer the increase is about 9% compared to about 30% in some of the highest grades. One of the stated objectives of the PRB exercise was to restore some equity in salaries across the grades; this does not seem to be quite the case.

Although government has approved the report and the Ministry of Finance seems ready to foot the bill of Rs 4.6 billion, one may argue whether the country ought to have deferred the this exercise. This is not a question that should have come up now. Government has been harping on the financial and economic crisis that is continuing since 2009, and has recently exacerbated in both North America and the eurozone countries, which are our established export markets.

Should it not have been proactive and engage with the unions, industry and civil society organizations to have frank discussions about the matter and then take a decision about the way forward? Perhaps settle for a yearly increase that would not strain the annual budget and result in as large an inflationary surge as is expected if the PRB recommendations are implemented.

As it is, MOFED has already instructed ministries not to ask for additional or new posts, and practically all unfunded vacancies in the public sector will not be filled because of the budgetary ceiling. This is shortsightedness and lack of coordinated planning, not to say a total absence of visionary leadership, because filling many of these vacancies would have resulted in a reduction if not elimination of overtime that is a bane in all ministries. Besides, it would have also provided much-needed employment, thus earning goodwill to the government besides allowing it to cut down on the utter waste associated with overtime. If the PRB ‘package’ were not as substantial, MOFED could then have been less rigid on ceilings.

One measure of the PRB report that can be commended is that relating to pensions, which will now be partly contributory. It is a start to make the social security burden more sustainable, especially in view of the ageing population. On the other hand, there does not seem to be much on organizational structure as had been expected from the declarations made by the director of the PRB. For example, the post of SCE is maintained, with a substantial salary raise. The fact that a good number of SCEs have not shed their bureaucratic baggage, especially in the technical ministries where they are posted, has defeated the very purpose of their appointment. They have not been able to change mindsets – starting with their own — or bring about innovations through providing the real executive leadership skills expected of them which alas, have not been visible. Unfortunately, they have constituted just another layer of the bureaucracy which could have been done away with.

It would have been better to eliminate this grade, and bring parity between the Permanent Secretary and the head of the technical division, which would have allowed more balanced decision-making. In the present set-up technical decision making is subjected to administrative overruling without, in most cases, any discussion or justification, and this is one of the major weaknesses that impedes government functioning. However, it would still be for the PS to report to the minister who, if s/he is wise enough, would always cross-check with the technical side so as to make sure that what is being submitted for decision is sound and the best for the country under the given circumstances.

Coming to the budgetary consultations that are currently being held, once again MOFED is going askance in insisting upon technicians to take policy decisions that are the prerogative of the political masters. Within their existing constraints, several ministries have nonetheless worked on and proposed efficiency gains measures, a number of which have been put into effect and have shown results already.

But as we remarked in an earlier article, pushing for extremes in efficiency gains is like squeezing dry lemon: there is only so much juice you can reasonably extract. Especially when it comes to the social sectors like education, welfare and health, it is clearly a matter of government policy as to the mode of their financing something which MOFED jolly well knows but pretends not to during the discussions with the line ministries. The country is ill-served by the absence of a real policy advisory unit which would function autonomously. That is the reason we are zig-zagging on a number of issues, Light Railway Transport for one.

Unless we address some of these fundamentals by calling upon our best brains and giving them the liberty to think freely and advise as freely, we are not going to make headway as rapidly as the country needs to face the rest of the 21^st century. Many swollen egos and personal power ambitions have to be let go of, for the sake of the country at large. Time for breaths of fresh air and for fresh thinking.

* Published in print edition on 12 October 2012