Pay hikes alone will not work

Written by YRK Reddy | Updated: Mar 30 2008, 03:42am hrs
A friend from London asked me if there would be more efficiency and less corruption with the pay hikes proposed for civil servants. A difficult question to answer, so I mumbled the predictable: of how badly Indian civil servants are paid; how the armed forces are demoralised and understaffed; and how talent is migrating to the private sector.

The recommendations of the Sixth Pay Commission may fix some of these concerns, and some claim that they would improve equity between, say, the armed forces and civil services. But then, equity being more perceptual than real, unions say the hike is peanuts and the armed forces think the measures not good enough. Equity and satisfaction with pay hikes have been old mirages that continue to haunt policymakers. Those who have narrowed their distance with their benchmarks would be happy, but those benchmarked against and others whose distance has been altered adversely, wouldnt be pleased. No wonder the IPS cribs.

So, will it improve efficiency, which is more real than equity Studies thus far are ambivalent on the link between pay hikes and performance. But some think that the proposed performance pay system will work. Seasoned analysts doubt it, though, for several reasons. First, standards of performance are difficult to establish in civil services, and experience shows that where they have been established, they tend to be loose and conditional. Second, lack of scientific standards would imply that performance would be determined mainly by behavioural parameters such as compatibility, loyalty commitment and devotion (are you in this with me or not). Third, in the absence of a scientific system that can deny performance pay to some employees, it will end up being an add-on deferred cheque for all to take home. Fourth, non-performers who are denied such pay will have reason to litigate. Fifth, the amounts, at such low levels as proposed, are bound to be discounted outright and will offer no motivation.

Will it reduce corruption Corruption has come down perceptibly in some departments where e-governance projects have been initiated. Transparency, accountability and efficiency have improved, as the World Bank has noted. But all that was achieved by process and procedure changes during the last decade that compel accountability. Obviously, the corrupt are unlikely to turn upright because of the hikeit is the power to extract or spirit away funds that is more important for them, as pay pales before the sums involved. Newcomers may have less need to be corrupt with improved salaries, but the deeply entrenched system may continue to baptise them by fire. Further, the pride in public service has eroded.

Do these arguments mean that the pay hike was unnecessary Not at all, as it was overdue and indeed falls short of expectations. But experience from the last Pay Commission shows that governments eagerly accept the easy partsplurging in the comfort provided by the fiscal space that the FM highlighted recently. The plea here is that the government must work hard at civil service and governance reform to create the conditions to make pay hikes work for the country. Three initiatives must figure prominently: first, the entire process of service delivery needs to be changed, as demonstrated well by e-governance projects such as those in Andhra Pradesh, Karnataka, Rajasthan, Madhya Pradesh, Maharashtra and Tamil Nadu. Experience has shown that efficiency, transparency and accountability improve in the process.

Second, the government must create sophisticated manpower supply pools, rather than rely on the traditional methods of sourcing at random through questionable recruitment processes. Third, the government must think innovatively and draw ideas from other countries on how to promote public service values and pride. Training, reinforcements and symbols could be used in combination.