How helpful is the new pay scale?

Earlier the government had constituted the sixth national pay commission in July last year headed by former cabinet secretary Mujibul Haque and gave a time frame of six months to submit the report. But the deadline for submission of report was extended to January 31 from December 31 due to two consecutive floods. Later, the report was submitted to the Prime Minister on February 2 and a secretary committee headed by Cabinet Secretary Dr. Saadat Hossain was formed to review the report. The Secretary Committee had suggested four pay structures -- a maximum basic pay of Tk 25,500 and minimum Tk 2,600, maximum Tk 24,000 and minimum Tk 2,500, maximum Tk 23,500 and minimum Tk 2,450 and maximum Tk 23,000 and minimum Tk 2,400. The government finally approved the lowest one. It may be mentioned here that the last pay commission, which was introduced in 1997 was also headed by Mujibul Haque, the chairman of this pay commission.

Since independence of Bangladesh, five national pay scales were introduced in 1073, 1977, 1985, 1991 and 1997 for the government employees, following reports submitted by the pay commissions. The first pay scale framed in 1973 put the lowest scale at Tk 130 and the highest at Tk 2000. The second pay scale announced in 1977 put the lowest scale at Tk 225 and the highest at Tk 3000 (fixed). The third pay scale introduced in 1985 put the lowest scale at Tk 500 while the highest one was fixed at Tk 6000. The fourth pay scale framed in 1991 was with the lowest scale at Tk 900 and the highest at Tk 10,000 (fixed). The fifth pay scale introduced in 1997 put the lowest scale Tk 1500 and highest at Tk 15,000 (fixed). If we analyse all the national pay scales, we find that, the ratio between the lowest and the highest scale of pay was 1? 15 in the first pay scale of 1973 while this ratio stood at 1?10 in the fifth pay scale of 1997. It was naturally expected that the ratio between the lowest and the highest scale of pay will decrease further in the new pay scale. The ratio between the lowest and the highest scale of pay now stands at 1:9.6.

The pay commission was supposed to take into account the cost of living, house rent, limited government resources, and complexities in the existing pay scale and recommendations of the Public Expenditure Review Commission and the Public Administration Reform Commission while framing the new pay scale. The government employees experienced an income erosion of about 39.4 percent since 1997 when the last pay scale was announced as there was no cost of living adjustment by taking money inflation in consideration, with a view to protect the real value of emolument in terms of 1997 price index. This has been reported by the Centre for Policy Dialogue, a leading non-government organisation. Economists observed that the sixth pay scale has not been adjusted with real income erosion caused by increasing inflation. It is roughly 8 to 10 percent lower than the required level of rise to protect real income. It was in 1997 when government partially implemented a new pay scale. Since then, there has been no adjustment of the government officials' and employees' salaries with the inflation.

The annual rate of inflation calculated on the basis of consumers price index, has increased to 7.35 percent by the end of September-2004, according to the latest available statistics with the Bangladesh Bureau of Statistics. The rate of inflation was 4.13 percent at the end of September 2003, just a year back. Food price was increased by 9.98 percent while such increase was only 2.89 percent just a year ago. Realising the absurdity of the existing pay structure to commensurate with inflation and the cost of living, the government took some meagre measures in June-2003, and granted 10 percent dearness allowance for all the employees enjoying the national pay scale. An amount of Tk 700 crore was allocated in the budget to cover the dearness allowance. The government also raised the medical allowance for all employees from Tk 300 to Tk 400 per month with effect from July-2004 as an interim measure.

The monthly basic salary of a Class 1 officer at the entry level, which was Tk 4,300 in the previous pay scale and Tk 2,850 in the fourth, has been fixed at Tk 6,800 in the sixth pay scale. The simple answer to this may be that the government can only employ the inefficient people at the poor salaries, as the better qualified and competent people would not join at such a meagre salary. The existing poor pay structure had also been widely believed to nourish the widespread corruption among the government employees. The poorly paid government employees would be forced to become unscrupulous and would use their official position to earn extra money to meet their normal needs. If we compare the pay structure of government employees with that of the private sector, that will only aggravate their agony and anguish. Those who are working in the private sector like the banks and insurance, vis-à-vis their respective counterparts in the public sector, have a very wide gap in their pay structure. The public sector officials cannot think of living a decent life like their counterparts in private sectors.

The Bangladesh government has a huge number of employees on its pay roll. Some 15 lakh people employed in different government and autonomous bodies will get the benefit of the new pay scale. Of them 8.28 lakh are civil employees. If we compare it with some of our neighbouring countries, we find that the total number of government employees is more than 6 percent of the total number of labour force in Bangladesh, while it is 4.5 percent in India and only 1.7 percent in Pakistan. If the number of our government employees remains so enormous the government undoubtedly cannot pay them a handsome salary. As such the right-sizing the government employees assumes a great deal of importance. If the bureaucracy is reduced to even a half of its existing size through some acceptable compensation package, and the competent officials are kept with handsome emoluments the government is sure to run its affairs more efficiently than the present.

The government will require Tk 5.76 billion to implement the first phase of the pay scale, Tk 16.43 billion in the second phase and Tk 17.65 billion in the third phase. The government has approved the lowest scale of pay as there is a pressure from the World Bank and IMF not to implement proposed pay scale fully. On return from Washington where he had consultation with the World Bank and IMF executives recently, the Finance Minister had said the pay scale would be given by May 20 despite objections given by the donors. An IMF team ending a two-week economic review mission on April 9 suggested phasing the mew pay scale over the next three years -- one installment a year -- considering the fiscal management and inflationary situation, and government did accordingly.

If we refer back to the recommendations made by the successive pay commissions we get an idea that the government did not accept all the recommendations as had been made by the pay commissions. The government constituted the 6th pay commission with some reputed educationists and professional experts. As such it was expected that the new pay scale would not be an old wine in the new bottle if the government accept all the recommendations made by the pay commission. The cabinet accepted 80-90 percent of the recommendations made by the secretary committee, claimed Saadat Hossain, who himself headed the committee. Meanwhile, some leading economists say that the new pay scale will bring little benefit to the lower-class employees and the majority of the public sector manpower, as their income is not increased corresponding to their needs. Another important point is that, a pay rise in no way spikes a price spiral in the market to eat up the benefit.

A.N.M. Nurul Haque is Asstt. General Manager, Sonali Bank Head Office.