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
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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.
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
A Glass of Mirror!
M G Warrier
I had a sleepless night
The morning after,
I saw the mirror
I ran away…
’Cos, I didn’t see me,
In the mirror
The mirror doesn’t cheat,
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.