7th Pay Panel Dole: What About the Ageing, Shrinking Government?

According to the Seventh Pay Commission, an ageing bureaucracy could be a liability, writes Mayank Mishra.

The government spends a humongous amount -- nearly half its tax revenue -- as pay and pensions to its employees. That is a lot of money just to keep a small group of central government employees happy. This exclusive group, which added slightly more than one lakh members every year from 2006 to 2014, would understandbly be delighted following the Seventh Pay Commission recommendations. Salary and allowances to be offered to government servants at the higher echelons now are comparable with the best in the world.

But is the bureaucracy that needs so much to keep itself afloat in the pink of health? The commission’s voluminous report offers some hints. It clearly shows that while the size of the government is shrinking, some would say rightly so, it is greying too.

Greying Secretariats

The age profile of government employees should be a cause for concern. Several key ministries and departments are filled with people in the age bracket of 50-60 years. From as high as 75 per cent of all employees in the Ministry of Textiles in this age bracket to nearly 62 per cent in the Ministry of Urban Development — data do not inspire confidence. In key ministries like Petroleum and Natural Gas, Heavy Industries and Coal, there are more than 55 per cent employees in this age group. It shows that the bulk of employees in these key departments are about to retire and the replacement cost is going to be huge.

Departments with such an age profile are seen to be slow in decision making, they are perceived to be averse to taking risks as well. Is that the reason why most of our government departments are slow to adapt to a fast-changing external environment?

The commission observes that “retiring personnel in a number of ministries/departments are substantial and this presents two sets of implications. At one level, losing experienced high level personnel entails unquantifiable costs as new recruits will require training and on the job skills. At the same time it presents ministries/departments the opportunity to align their personnel requirement in line with their current and future challenges.”

The ageing bureaucracy is both a concern and also an opportunity. With so many government servants about to retire, we now have a chance to devise ways to bring in external talent to infuse vigour in the government system. Such experiments in the past have yielded results.

Bureaucracy’s Shortcomings

• Key ministries and government departments filled with employees in the 50-60 age bracket
  
• Bulk of employees in key departments are about to retire and the replacement cost will be huge
  
• Seventh Pay Commission warns losing experienced personnel due for retirement; urges govt to re-align personnel requirement with future challenges
  
• Panel also points to massive shortage of manpower in ministries associated with welfare benefits for the people
  
• Manpower deficit can be overcome by lateral hiring from an available pool belonging to the private sector
  

Induct External Talent

The Unique Identification Authority of India (UIDAI) that rolled out Aadhaar was one such experiment that has been a roaring success. Controversy about whether Aadhaar violates privacy or not aside, the UIDAI as a government start-up has been a success story.

It rolled out unique identity numbers much faster than anticipated and at a cost much lower than the lowest in the world. What is more, the organisation worked with a staff strength that was one-third of what was sanctioned! Can’t such experiments be replicated?

Manpower Shortage

An even bigger cause for concern, as highlighted in the pay commission report, is the massive shortage of manpower in ministries that are supposed to accelerate economic growth and deliver welfare benefits to the people. The commission notes that personnel strength in every major ministry, except the Ministry of Home Affairs, declined between 2006 to 2014. As a result, the manpower deficit that stood at 14 per cent in 2006 climbed to 18 per cent in 2014. We now have 139 central government employees per one lakh population as opposed to 668 in the United States.

Such a huge manpower deficit, though good for fiscal health in the short-term, impacts the quality of governance. The gap could have been filled up by the process of lateral hiring from an available pool from the private sector. But, save a few, the attitude of most ministries to contractual hiring has been one of indifference. Some ministries, Information Technology for instance, have gone for contractual hiring, many others have outsourced basic jobs like housekeeping, driving and secretarial assistance. Lateral hiring as a norm is a non-starter.

The commission has therefore opined that a “clear guidance from the government on jobs that can and should be contracted out would be appropriate. While doing so the concerns of confidentiality and accountability may be kept in view. Further, to bring about continuity and to address the concerns regarding exploitation of contractual manpower, uniform guidelines/model contract agreements may be devised by the government.”

The government now has a chance to merge populism with long-term planning. There is nothing wrong with taking care of its employees’ interests adequately as long as efforts are on to bring in the much needed efficiency in the government machinery.

(Mayank Mishra writes regularly for the Business Standard)