Pay Commission: No match for inflation

Even if this means ignoring the vast majority of workers in other sectors who, during February 20-21 strike, had insisted the Government take tough measures on controlling inflation and did not demand any wage hike Shivaji Sarkar At a time when the Government is pursuing its ban on recruitments, Central Minister Lalit Maken's statement supporting the setting up of the Seventh Pay Commission for Central government employees has come as a shock. It is an admission that all is not well in an election year thanks to inflation and the Government employees need to be placated. In short, time to buy votes. Even if this means ignoring the vast majority of workers in other sectors who, during February 20-21 strike, had insisted the Government take tough measures on controlling inflation and did not demand any wage hike. The statement on the Pay panel is indeed bizarre particularly when the nation is passing through a severe economic crisis, Government's revenue earning is becoming critical, borrowings are setting new records, industrial production is dipping to a new low every day, even the so far thriving automobile sector is slashing production and a host of workers in other industries, including banking, are being denied wage hike. What has prompted the Government to appear so considerate? It is certainly not the plight of the employees, who due to raging inflation are suffering over 40 per cent erosion since 2006, since they got the last pay revision. And there is no compassion either. The move is crass political consideration in an election year. Worse, it is unmindful of the fact that it would weigh down the country with huge borrowings and whatever semblance remains in an economy is bound to collapse. The employees need dearness neutralization. But if inflation, largely fuelled by Government actions, remains uncontrolled no wage hike would be able to match it. The UPA Government, wary of the mood of employees, is paving way for buying their votes. It is yet another master stroke such as the cash transfer of subsidies, unenforceable Food Security Bill and similar vote-buying largesse. But sadly all this at the cost of the future of the nation, which is under threat of liquidation. Recall, the Sixth Pay Commission cost the Government dearly � about Rs 20,000 crore in arrears and almost an equal amount annually. Interestingly, the Railway Budget this year speaks of coming out of its blues after struggling for over four years. However, the Government departments and public sector organisations despite their requirements are unable to recruit new staff because of an internal ban � a move for government austerity! New jobs are not being created in the private sector either. Rather as per Government reports 19 million workers have lost their jobs during the tenure of the UPA Government. Existing workers in many industries including the IT and media have not even got their increments for the past over three years. Wages, in short, are stagnating across the board. The Prime Minister's Chief Economic Advisor Raghuram Rajan is concerned about the raging inflation. He says that industry is not hiring permanent workers. He disapproves schemes such as cash subsidies and other "socially-inclusive" schemes � that includes MNREGA- saying: "We have to tailor the coat to fit the cloth. Even the relatively better off in this country live in shacks". He virtually does not agree that this is the time the Government could dole out hikes to its existing employees. A reticent Reserve Bank Governor D Subba Rao under Government pressure cut repo rate by 0.25 per cent saying high inflationary situation does not allow any leeway for him. Burgeoning current account deficit (CAD) remains a grave concern for Rao. The forex crisis is getting graver every day as exports are shrinking. The kitty may not suffice to fund rising imports. He says: "Even as policy stance emphasizes addressing growth risks, the headroom for further monetary easing remains quite limited". In all this, the worker unlike in the decades of 1970s is not responsible for the slowdown. He is being edged out. The raise in the Government- Central, State and related areas � is leading to social tension as the wage gap increases. It was believed that pay-scales of the government employees decide the floor-level wages in the other sectors. This has not happened. There have been more casual and contract jobs since the Sixth Pay Panel report were implemented not only in the private sector but in Government itself. All Government departments are employing workers on casual and contractual basis. About one-third of Government jobs are not on pay-panel terms. In many cases, such workers are paid less than 50 per cent wages. It means even within the Government there is neither fair play nor wage neutralization. The suffering of those outside its pale can be imagined. Indeed, failure to control inflation is heaping miseries and the Government itself is fuelling inflation. Two primary causes for inflation have been the continuous tax and petroleum price hikes. During the past three years, petroleum products prices have almost doubled. It has increased travel and goods movement cost by over 100 per cent. Even the Railways, which is running on profit, have increased fares by over 30 per cent even for the lowest class of travel. Freight charges have more than doubled increasing prices of commodities further. Even excise duties on items such as sugar, service taxes and VAT on food items have been raised. Fertilizers have become expensive leading to high farm costs. Even parking charges all over the country, mostly controlled by Government or semi-government organizations, have quadrupled despite no additional cost on these. The mafia controlling it is known to give cuts and privatisation of public services is playing havoc. People are suffering, but the Government refuses to take action to control inflation. Ironically, it has at least one advantage i.e. funds of a political party may have more than trebled during these turbulent years. State bribing of voters through MNREGA has paid some dividends to the ruling combine. While employees need a wage hike doing this only for a section of the workers is not going to be any help. Opposition parties, fearing the wrath of Government employees, prefer not to oppose such a move. They need not. But the parties are certainly expected to also voice the concerns of millions of non-Government workers and farm labourers on inflation. Freezing wage hike is not a solution. The Government needs to ensure that its decisions benefit all-- across the board, if it doesn't want unrest to spread. With a limited kitty the Government's welfare activities have virtually come to a naught. The Opposition has to look beyond Government employees--approximately two crore or about 1.5 per cent of the population. An economy that is not burgeoning cannot think of footing high wage bills for long. Argentina did it and led the country to a morass. The people want political parties to act with vision and concern. If they do not, irrespective of their shade, the rise of an Arab-type uprising, shades being seen in some popular movements, cannot be ruled out. The Opposition parties need to rise to the occasion and fight inflation, a task those in Government would not do. More importantly, the Opposition needs to ensure that it is not seen to be in league with the treasury benches. -INFA