A 90 per cent pay hike? Hmmm . . .

Whoever has heard of pay hikes of such magnitude? In more concrete terms this will cost the taxpayer an additional Tk.5200 crores per year to make the lives of government employees easier.

The question is: Have these employees made the lives of the taxpayer any easier?

Hmmm . . .

Now, I am not advocating that government employees should live austere lives of renunciation. But a 90 per cent hike? It does raise many questions: Let me pose some of these questions in three major areas.

The inflation argument
The DS report suggests that the pay hike was induced by an increase in inflation of 31.76 per cent. May I ask what the government employees have done to curb such high rates? If they had helped to facilitate productivity growth or stopped wasteful spending, should we have seen such high rates?

And with the injection of this new money into the economy, without any links to productivity gains, what does the PC think it will do to the inflation rate? Tame it? Have they done any simulations? And where will the additional money come from? Newer taxes? Higher taxes? From whom?

As if the artificial tax posed on the citizenry by the high rate of inflation is not enough . . . now the taxpayer has to cough up more? Who will hike the taxpayer's income? The whip? Hmmm . . .

The confirmation process
The DS report suggests that a secretary-level committee will scrutinize the recommendation and file a report for retroactive implementation from January 1. Does the PC not foresee a conflict of interest situation here?

Since this pay hike most likely has direct beneficial implications for those involved in scrutinizing the proposal and approving it, can we expect to see them raise any red flags? Will they debate the controversial issues? Who guards the guards? Hmmm .

. .

The distribution of benefits
Is everyone getting a 90 per cent salary hike? What is the rationale? At the lower rungs of the scale, where life is decidedly much tougher, and where real relief is needed, will this salary raise make a big difference? Going from Tk.1,500 to Tk.3,000 is certainly quite inconsequential compared to going from Tk.15,000 to Tk.27,000 . . . wouldn't you say? Hmmm . . .

What should be done?
First and foremost, the PC report should be made public, preferably on a publicized web site, and opened up to debate so that key stakeholders can weigh in with their opinions. Only then will the pros and cons of the recommendations be really seen in their true glory!

Next, the pay hike should not be automatic; it must be tied to performance parameters. In this regard the PC must work a bit harder to lay out performance criteria in concrete terms so that the government employees know what is expected from them and what goods they should deliver. Those who do ought to be rewarded; those who don't should not expect any rewards.

In this regard, I would suggest "bonus payments" instead of permanent pay hikes, especially because the economic environment does not promise galloping and continuing gains in the foreseeable future. The PC should clarify what rate of economic growth they have been forecasting and whether it would ensure that such pay raises can be sustained? And what if there is a downturn in the economy? In that event, is the PC thinking of printing money to pay the government employees or would they rather run to the aid agencies with the beggar's bowl?

The ramifications are indeed grim. Instead, the bonus idea seems better: Tying it to improvements in performance indicators would only guarantee gains to those who work hard to bring about such gains. Isn't that how entrepreneurs and employees in the private sector get paid …by working for it?

Of course, designing performance measures is no simple task . . . but isn't that what the Pay Commission should be doing? And what sort of thinking and analysis went into their discussions? Were the numbers worked out logically or were they pulled out of a magician's hat? I wonder! Hmmm . . .

Finally, there is evidence that "less" government makes greater sense by making it more efficient and less intrusive. It especially helps remove the many "gatekeepers" whose sole role is to collect "dues" (wink, wink) from whosoever comes to their gate.

So, if the salary hikes are to be made permanent, it is important, first, to trim -- nay, slash -- the size of the government. Then let's pay the deserving government employees with the savings from ridding us of the unnecessary and non-performing staff.

That would also relieve the taxpayer from further burdens. Salary raises, for the most part, should be inextricably linked to performance gains. Any other basis for raises, especially when it is so large, is illogical, unsustainable, and a bad deal for the taxpayer.

Dr. Syed Saad Andaleeb is Professor and Program Chair, Marketing, Black School of Business, Penn State, and Editor, Journal of Bangladesh Studies.