Yet another pay commission

A new pay and pension commission has been set up by the government to review the public sector salaries and pension system. Not only does the public sector wage and pension bill claim the lion’s share in the budget, it has also been growing disproportionately over the years. Ironically, however, government servants are always seen complaining about poor salaries while the public secretariats are often witnessing protests by disgruntled employees. The government employees clearly aren’t happy; the state is definitely at the losing end; and the taxpayers are bearing the cost of this lose-lose situation.

So, how can yet another commission resolve this problem?

Unfortunately, in Pakistan, such commissions are used less for addressing the problem at hand and more for sweeping the issue under the carpet. No wonder that this is the umpteenth commission on the same issue, starting right from 1948 with Justice Munir Commission followed by Cornelius Commission in 1959, National Pay Commission in 1970, and Ishrat Hussain Pay Commission in 2009; not to forget scores of committees and taskforces over the years, entrusted with the same job. Even I was a member of one such committee formed in 2015.

By now we know everything that is to know about the problems with the government’s pay and pension. Although the indiscreet and steady expansion in government size over the years has been the root cause of exponential growth in the pension and wage bill, the nature of the prevalent problems within pay versus pensions vary a great deal. This piece will only discuss salaries and leave the issue of pensions for another day.

What is wrong with government salaries? In short, government servants in grades 1-16 are generally overpaid, whereas those in grades 17 to 22 are underpaid. About 85 per cent of government wage bill is spent on these subordinate grades, with staff having extremely poor capacity and low or no value addition in most cases.

The lowest tier in the government, known as Class IV employees including naib qasids (peons), dispatch riders, etc, take the cake and enjoy a substantial premium over the market, along with rock-solid job security and lucrative pension, but with far less workload. These jobs are therefore very attractive in the lower rung of the society, and politicians have been commonly using them to reward their political followers.

Then comes the grade system itself. Ironically, only six grades are deemed enough to define the salary structure of senior officials, belonging to grades 17 to 22, whereas there are 16 different grades for support staff like peons, drivers, clerks, assistants, superintendents, etc, giving them much wider mobility. Some of these lower grade employees can jump as many as ten or more grades during their careers, whereas doctor and engineers hardly climb four grades.

Such unified grade structure, seniority-based promotions and absence of performance-based pay discourage high performance and instead create perverse incentives for senior civil servants to rely less on chasing promotions and more on vying for lucrative postings. The powerful get their perks through fleets of official cars and sprawling residences, but the distribution of these payouts remains skewed in the favour of a select few.

How can we address this problem? It is simple. Do away with the unified grades, revise the salary based on market indexation, introduce simplified and transparent compensation structure, remove ad hoc allowances, monetise all perks, introduce pay-for-performance incentives, and gradually get rid of the heavy base of the pyramid (BPS 1-16).

But to do all this, we need political will. Whether we have such political will or not, one thing is clear: more commissions will not help and will only result in the proverbial paralysis by analysis.

Published in The Express Tribune, April 28^th, 2020.

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