WEEKEND LIGHTER: Relevance of Remuneration
WEEKEND LIGHTER: Relevance
of Compensation
(October 22/23, 2016, No.44/2016)
Weekend Lighter is
posted every Saturday @mgwarrier.blogspot.in
I
Opening Remarks
Relevance of compensation
M G WARRIER
The notification inviting applications for the post of Deputy
Governor, Reserve Bank of India appearing at RBI website, inter alia, says:
1. Qualifications and experience
(i) Persons who have at least 25 years of work
experience in Public Administration including experience at the level of
Secretary or equivalent in the Government of India.
(ii) Or from among persons who have at least 25
years of work experience in an Indian or International Public Financial
Institution.
(iii) Or from among persons of exceptional merit and
track record at the national or international level in the relevant field(s).
2. Age: Not more than 60 years of age as on
04.09.2016.
3. Salary and Allowances: The post carries the
pay scale of Rs 80,000(pre-revised).
*** ***
After noticing some inconsistency or oddness relating 1 and 3
above, I discussed the inadequacy of remuneration offered in the context of profile
expectations with some of my friends inside and outside RBI. Let me share some
of the responses, before making my own comments on the subject:
(a) The pay indicated is exclusive of
allowances and perks. If you go by a C to C approach, pay plus allowances will
be something higher than Rs 2 lakhs and if you monetize the commercial rent of
the residence the Deputy Governor is entitled to, it can go up by another one
lakh easily.
(b) Once the pay is revised, it will look more
decent.
(c) This is a post-retirement engagement and
people look at it for the glamour value. Aspirants would have earned enough by
that time and if someone comes after retiring from government service or
organisations like IMF, they may be getting a hefty pension check.
(d) After all, in recent times people like Dr
Raghuram Rajan and Urjit Patel came to RBI leaving highly-paid jobs. They are
not looking at money at all. Only Duvvuri Subbarao indirectly expressed his
discomfort by asking for more salary for CEOs of PSBs. Nobody seems to have
taken cognizance of that.
Each of the above
views may be based on genuine perceptions and factual. But, I still feel that
there is something wrong in expecting top executives of organisations like RBI
to work 24X7 offering them sustenance level remunerations.
The forthcoming
Economic Survey, according to Arvind Subramanian, Chief Economic Advisor, will
have Basic Minimum Income as one of its ‘themes’. Perhaps, time is opportune
for a national level debate on top level remunerations actoss government(s),
public and private sectors. As Narayana Murty of Infosys pleaded sometime back,
there is a case for having some rational relationship with the median wages and
minimum and maximum remunerations in government, industries and services
sector. Moving forward, while the incentives for hard work and entrepreneurship
have their place in a growing economy, compensation for work need to have some
relativity across public and private sectors.
Employee morale
depends on several factors. Compensation commensurate with job expectations is
one of them. And this is a principle which is applicable for the ordinary
worker and CEO in equal measure.
**************************
II
Recent responses
Monetary Policy
Committee
Monetary Policy
Committee was conceived by Financial Sector Legislative Reforms
Commission(FSLRC) as one of the many reforms that would finally help Finance
Ministry make RBI amenable. Though its brief was to recommend on financial sector
legislative reforms, FSLRC concentrated on truncating and weakening Reserve
Bank of India. It invented reasons even to change the designation of the head
of RBI. But, RBI is a lucky institution. Many things changed by the time the
recommendations of FSLRC were being taken up for implementation. They just
became reference points for further action on subjects covered in the report.
The two events, the presence of Dr Raghuram Rajan at Mint Road from 2013 to
2016 and the change of guard in New Delhi worked in RBI’s favour.
Thus the Monetary
Policy Committee got a makeover as an expert body unburdening the RBI Governor from
the individual responsibility to explain every policy decision. Since the time the constitution of MPC
was announced, a section of analysts has been apprehensive of MPC dividing
itself into Team A(RBI) and Team B (GOI) and voting for constituency interests,
making casting vote by Governor essential to take decisions. The professional
way in which MPC has conducted itself in its debut meeting as evidenced by the
views of each member on the policy
stance, now in public domain, has proved these doomsayers wrong. As it gains
more experience and a feel of RBI’s role, MPC will graduate into another strong
pillar supporting the central bank.
M G Warrier, Mumbai
Universal social security
The recent move
by Centre to introduce a comprehensive social security plan for workers in the
unorganized sector will be welcomed by all. Time is opportune to initiate
measures for ensuring universal social security. The recognition at the highest
level that economic growth alone will not bring social security for all, by
itself, is a comforting signal.
The sporadic
handling of social security issues so far has landed India in a shameful
situation where formal social security systems are not accessible to the
majority who need them. Still we refuse to have a holistic approach to or a
comprehensive review of, the available social security architecture. When
external experts suggested we should slowly move out of the “Pay As You Go”
approach to government pension schemes (when this happened the unfunded pension
liability of central government alone was about Rs four lakh crore- no need to
get scared, the unfunded liability of private pension funds in US at that time
had crossed $4 trillion ), we coolly discontinued pension scheme in the
organized sector and introduced what is now known as National Pension System,
which has none of the features that differentiates a pension scheme from
Contributory Provident Fund for government and public sector employees joining
service from various dates beginning January 1, 2004. Now different pension and
retirement benefit products are thrust upon employees in the organized sector
across sectors and income groups. Mentioned this in some detail to emphasise
that the future social security schemes will have to be universal covering
workers in both organized and unorganized sectors.
If there is a
will, there is a way. Once social security, like Basic Minimum Income, is
accepted as a priority, no one can scare a government by talking about
resources constraints. The resources must come from the remuneration of the
workers earned during their working life. If government or other employers did
not factor in the cost of post-retirement life in the wages they paid, they
will have to compensate by contributing to the corpus of the fund proposed to
be set up for social security initiatives now. Similarly, well-paid workers
should be encouraged to save more by appropriate disincentives for diverting
income (these could also be tax-related).
All unclaimed
deposits and unpaid claims for want of details of the beneficiaries lying idle
with organisations including in the private sector(like insurance companies,
banks, provident funds and so on) should
be pooled and ploughed into the corpus of the social security fund. GOI may
have to work out a consensus on the idea by bringing state governments and
major corporates on the same page. Corporates will be too willing as some of
them are eager to increase their share in social responsibility.
M G Warrier, Mumbai
III
Leisure
A Glass of Mirror!
M G Warrier
I had a
sleepless night
The morning
after,
I saw the mirror
Shocked,
bewildered
I ran away…
’Cos, I didn’t
see me,
In the mirror
The mirror
doesn’t cheat,
I believed…
I could feel my
face,
I touched my
nose,
But then…Where
am I?
If I am not in
the mirror,
How can anyone
see me?
How can I ask,
Someone who
can’t see me,
To feel me by
touch?
** ** **
A sudden
‘shout’…
Brought me back
To my senses…
“Who has
reversed the mirror?”*
***
*It
was a fancy mirror. One side mirror and the other side opaque.
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