7th Pay Commission hike approved: Are government jobs more lucrative than private now?

By: and |
Updated: July 1, 2016 7:21:08 PM

7th Pay Commission hike has raised the salary level for lowest entry-level government jobs to Rs 18,000 per month.

7th Pay Commission, 7th Pay Commission hike, 7th Pay Commission nod, 7th Pay Commission salary7th Pay Commission: With this salary hike, will government jobs become more lucrative than the private sector ones?

7th Pay Commission hike has raised the salary level for lowest entry-level government jobs to Rs 18,000 per month. A freshly recruited Class I officer will get Rs 56,100. At the highest level i.e. Secretary, it would go up from Rs 90,000 to Rs 2.5 lakh.

With this salary hike, will sarkari naukris become more lucrative than the high-flying private sector ones? According to FM Arun Jaitley, the 7th Pay Commission hike brings the salaries of government employees at par, if not higher, with those in the private sector. Will the comfort of job security along with better pay package than earlier, be a good lure for India’s youth to opt for government jobs?

Yes, No or can’t say? Experts at TeamLease, MDI and Aon Hewitt have mixed views.

Why private sector attracts:

Rituparna Chakraborty, Executive Vice President at TeamLease is of the opinion that it would take a lot more than just pay hike to attract young people to the public sector.

Also read: 7th Pay Commission: Government employees, invest your money here!

“I am not sure if that was the intended objective however if it was, one would take more than just pay increase to make it attractive over private sector jobs. While government offers jobs security – its unintended consequence is tenure, seniority are prioritised over merit,” Rituparna Chakraborty tells FE Online.

Chakraborty explains, “There is a perception of little or no autonomy, there is no clarity around goal setting and appraisal management. Young generation also looks at instant gratification through incentives, rewards, etc – which am not sure government can measure up to.”

Suresh Raina Managing Partner of Hunt Partners agrees, “There is no denying that to attract talent to the government sector, the compensation + perks have to eventually match the private sector. We are far away from that, and it has to be matched by similar accountability and empowerment. It is a step in the right direction, but not enough without linking to accountability.”

“Unless we identify and focus on the core sectors for example Education, Health, Civil Services that are critical for economic growth and demographic transformation, and implement strategic reforms, the progress will be slow and painful,” he adds.

Rural-urban divide:

Andrew Dutta, Associate Professor, Human Resource Management at MDI (speaking in his personal capacity) agrees. “The urban Gen Y workforce aspiring for quick promotion, greater responsibility and challenges at work and work-life balance usually do not take up ‘entry-level’ jobs in the government,” Dutta feels.

Dutta is of the opinion that it is the rural Gen Y, which still works hard for the ‘probationary’ officers kind of entry level executive roles in the government sector and nationalized banks. “This is exactly here where stability in job coupled with the new increased pay structure will see some cross-sector mobilities and talent flight to public sector,” he tells FE Online. “This rural-urban divide however dissolves when it comes to the top job of civil servants and here the increased pay rise will surely be a big, if not the only one, differentiator,” he adds.

“Life in government job is very different than the life in private sector in India. Our young workforce chooses this life by design and not by default. Money has very little role to play here,” he says.

Advantage government:

Anandorup Ghose, Partner and Head Rewards Practice at Aon Hewitt begs to differ. Ghose believes that government jobs have always been lucrative. “Strictly speaking government jobs were already lucrative than private sector at the entry levels and will, after the 7th CPC, become even more so. The data shows that at an aggregate level private sector jobs will be at a discount of approximately 30% at entry levels and pay would be very similar at junior and mid management levels between government and private jobs,” Ghose tells FE Online.

“There are nuances however, private jobs tend to see faster pay escalation than government jobs, the 7th CPC is saying that pay levels for government jobs will be revised with more frequency than in the past, if that is the case then this proximity in pay levels will continue, else private jobs will soon start edging ahead,” Ghose adds.

Trends ahead:

Chakraborty believes the seed has been sown to attract high calibre talent in government jobs.

Dutta of MDI sees top talent from the best b-schools witnessing a slight change in trend in the next few years. “Those top b-schools where some of the best PSEs visit to get their middle managers, will now give the private sector employers a tougher competition to wean away the best talent on campus.”

“It is only aggressive risk takers who would not want to have job stability and higher pay and choose a life of hard deadlines and back breaking workload for higher pay and compensation than the 7th Pay Commission,” Dutta concludes.

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