Government and Central Public Sector Undertakings (CPSUs) pay more salary for entry-level jobs compared to private companies, but the salary in private companies increases with experience, shows a study conducted by IIM-Ahmedabad for the 7th Pay Commission.
The study was commissioned by the 7th Central Pay Commission and IIM-A was asked to undertake it, so that the commission can revise pay in such a way that government jobs attract talent.
The study provides comparison of salaries in the government sector, CPSUs and private sectors at the entry, 3rd, 5th, 10th, 15th, 20th and 25th years of experience. It was submitted to the 7th Pay Commission in October last year.
It shows that across a majority of job roles, government or CPSUs pay more than private companies at entry-level.
For many jobs, the salary difference narrows and become more comparable and even exceeds for private jobs as employees gain experience.
The study looks at the salary patters of nurses, doctors, physiotherapists, dietitians, lab technicians, school teachers, principals of schools and colleges, scientists, technical staff, engineers, clerks, software developers, accounts officer, drivers, gardeners, among others.
“In many of the roles, government is paying higher salaries compared to the private sector, particularly in initial years, for jobs at the lower levels of skill requirement and hierarchy.
“Salary in government is relatively lower compared to the private sector, particularly in later years, for some highly skilled jobs,” the study says.
Salary of entry-level nurses, for example, is more in government hospitals compared to private hospitals and becomes comparable only in the mid-career level.
In the case of doctors with MBBS, CPSUs pay more than government or private sector for entry-level doctors, with the differences continuing even after they have gained experience.
For specialised doctors, however, CPSUs pay more at entry level, but the salary of doctors in private hospitals increases significantly after three years and continues to do so, depending on their specialisation.
Government pays more to entry-level scientists till mid-career level compared to private sector, because private sectors value “untested scientists” less but pay more as here “compensation is driven by the ability to provide results and this characteristic rises with number of years of experience,” the study says.
Physiotherapists and dietitians, the study says, get much higher salary in government and CPSU jobs, compared to private sectors which continue to pay them less even after years of experience.
“Retention is not a major concern for this job role in the private sector,” it says.
Private sectors tend to pay less for jobs that have low career progressions and are marked with learning only in initial stages of career, the study says, showing examples of jobs of lab technicians, operation theatre assistant and radiographers.
In their case, government and PSUs pay more than private sectors not just at entry levels but also at mid and late-career levels, it says.
“The five factors that emerged as relevant ones for determining level and components of salary are: career progression, potential learning on the job, supply over demand in the labour market, requirement of attracting top talent with excellent academic performance, and requirement of retaining key competencies,” it says.
For engineers, software developers, network engineers and programmers, CPSUs pay more compared to government and private sectors but the differences narrow with the years of experience.
In the case of clerks, receptionists, drivers and gardeners, government and CPSUs pay more salary at not just entry-level but even at later career compared to private companies.