While Central government officials are all set to take home a fatter pay packet, executives in the public sector undertakings (PSUs) would have to wait for some more time.
It is learnt that several PSUs have objected to some of the key proposals put forward by the Second Pay Revision Committee (for PSUs), submitted in May this year. Moreover, key ministries like coal, petroleum and natural gas, among others, are yet to send in their views on a Cabinet note circulated by the department of public enterprises in the ministry of heavy industries and public enterprises.
Prime Minister Manmohan Singh, finance minister P Chidambaram and heavy industries minister Santosh Mohan Deb, are learnt to have strongly backed the recommendations of the Pay revision panel, some of which are unprecedented and could pave the way for far-reaching reforms in PSU governance.
The committee has recommended that the pay scale for PSU employees be independent of Central government salaries. The Cabinet was expected to take up the second pay revision committee?s report some time last month or early September, but PSUs? objections and ministries? dilly-dallying on the proposals has delayed the decision.
?Lot of objections have been raised by the stakeholders. Many PSU executives have objected to the fact that different pay packages have been recommended for the same grade of executives working in PSUs involved in the production of the same type of products,? a senior government official told FE .
The PSUs have also objected to the new classification of PSUS in to five categories ? A+, A, B, C and D based on the total income, size of manpower and geographical spread of their operations for the purpose of deciding the ?fixed? component of the package. ?All of them want to be classified as A+ because then they will get more money as the new pay revision is profit-linked,? an official said.
The second pay revision committee, set up under Justice M Jagannadha Rao (retired Judge, Supreme Court), had recommended a considerable hike in the pay package, giving more weight-age to performance related payment ranging from 40-200% and introducing ESOPS.
The move is expected to benefit around 2.5 lakh executives working with the 247 PSUs. The new pay scale would be effective from January 1, 2007. The proposed hike would be not bleed the government exchequer, as the PSUs would be required to foot the bill themselves.
?In the last few years the public sector system had failed to attract any IIT or IIM graduate in to any of the public sector enterprises,? a member of the panel said. ?Therefore, the committee?s endeavour was to raise the pay scales to a level closer to those offered by private sector companies to attract suitable managerial talent and stem the exodus.?
The compensation package for PSU officials has been decided, independent of what has been proposed for the government employees by the Sixth Pay Commission. The revision is an attempt to progressively align the pay of PSU executives with those of their private sector counterparts.
In fact, this pay panel?s report is very unique in many ways. For instance, in its preface itself, the Committee had questioned the very practice of setting up a panel to decide PSU execs? salaries. ?A question that was repeatedly raised in our discussion with CPSEs was that 10 years are too long a period for pay revision in the public sector and that this time gap should be reduced to five years or so. Our general preference will be that once our recommendations have been given effect, the responsibility of future revision should be given to the board of directors of a company subject to the approval of the concerned ministry in discharge of its role as shareholders. We would like to see that we are the last such committee for deliberating on the remuneration structure in the public sector as a whole and that hereafter no such committee will be necessary,? the preface said.
Revision can be considered by the board of directors and the concerned ministry, as and when necessary on the basis of the economic situation and the nature of the concerned industry. Furthermore, the report?s authors believe that each PSU be looked at separately and the concerned ministries should follow different approaches specific to the particular industry.
The board of directors of the company should be the agency primarily responsible for fixing up remuneration of officers. Only the emoluments of the chairman & managing director should be settled by the nodal ministry.For the the rest of the PSU workers, the ministry should be left out of decisions regarding salary, the panel mooted. The increased remuneration for the PSU employees hoped that the responsibility of future revision of pay be done by the board of directors of a company subject to the approval of the concerned ministry in discharge of its role as shareholders.
While making a case for performance-linked pay package wherein better profit making PSUs? officials would earn more, the panel cited an interesting fact – pointed that around 45 public sector corporations listed on the stock exchange are responsible for over 25% of the prevailing level of capitalisation in the stock market. A significant number of them are ?star performers in the Sensex.?