Market Competitiveness of Remuneration
In any free market (in this case we are talking of the labour market) we are likely to get what we pay for. The forces of competition invariably drive the price of each commodity down to the point which reflects its true underlying value. Not all people are equally capable; so the best indicator of their value is their price or salary. Private companies are aware that they have to pay a premium for high-quality talent. Similarly, to attract high quality talent, APS remuneration has always been based on ‘market competitiveness’. Even at the senior levels, where it is not always practical to fully match private sector salaries, salaries are broadly comparable with the private sector. Senior public service managers in Australia are paid in the vicinity of Rs 1½ crores per year in equivalent dollars.
Indeed, the Whitlam Government of the early 1970s (in Australia) raised salaries and other work conditions of public servants to a level slightly above what purely competitive analysis would call for, so as to set an example for the community on good working conditions. ‘In some instances, employment conditions improved in advance of community standards, including paid maternity leave, increased annual leave, the extension of annual leave loading, flexible working hours, and changes to workers compensation and long service leave.’[i] Similarly, when pay competitiveness had eroded somewhat in the early 1980s, the Public Service Board reviewed salaries to ensure competitiveness with private sector salaries.
In the meanwhile, the discretion to offer different salaries to different public servants has increased significantly in the APS. In response to economic and technological change and the growth of specialization, the APS is now no longer treated as a single labour market with common employment standards. Each department and agency is empowered to develop its own remuneration policy within broad parameters. This means each department functions like an independent private sector company, attracting the best talent needed for its needs through flexible remuneration.
On the other hand, remuneration policy in India has been dictated like everything else not by common sense but by the ideology of Nehruvian socialism. Since equality is the be-all of the socialist model, the Cornwallis principle was reversed after independence and senior public service salaries were allowed to erode. This was done by fully compensating junior positions for inflation while senior executives were only partially compensated. According to the Fifth Pay Commission (1994–7) this ‘erosion was a consequence of a deliberate policy followed for a long time under the mistaken impression that impoverishment of the higher bureaucracy was an essential ingredient of a socialist pattern of society’.
Second, in India, civil servants are always exhorted to sacrifice for the sake of the country. While it is true that good civil servants are not driven only by money, they do expect to be looked after reasonably well as acknowledgement of their contributions and for the management burden they shoulder. In any event, it is improper for civil servants (or anyone else for that matter) to be asked to sacrifice. Indeed, the concept of sacrifice is anathema to a free society. A free citizen never sacrifices and never asks anyone for a sacrifice. If I were to have the occasion to save the life of a drowning child at the cost of my own, that would not be a sacrifice. Having voluntarily chosen such a course of action, possibly in a split second, I would have gained by setting a clear example of ethical behaviour for my children. What may appear to be altruism on the surface is often enlightened and reasoned selfishness – the ultimate virtue. Enlightened selfishness and so-called altruism merge seamlessly into one.[ii] As a general rule, each of us helps our society most by looking after ourselves and standing on our own feet. A free society is therefore only entitled to make an appeal to the self-interest of others.
[Note: This is an extract from my book, Breaking Free of Nehru]
[i] Public Service and Merit Protection Commission, Serving the Nation: 100 Years of Public Service, Commonwealth of Australia, Canberra, 2001, p.175.
[ii] As Charles Darwin noted, ‘Although a high standard of morality gives but a slight or no advantage to each individual man and his children over the other men of the same tribe [...] an advancement in the standard of morality will certainly give an immense advantage to one tribe over another’ – in The Descent of Man, published in 1871.
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