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A Study for Comparing Salaries / Emoluments in the Government Sector vis-à-vis Central Public Sector Undertakings / Private Sector in India
, Manjari Singh, Biju Varkkey, Sunil K Maheshwari, , Jatinder K Jha
Published in Government of India
2015
   
Issue: October
Abstract

This study is done by the Indian Institute of Management Ahmedabad for the Seventh Central Pay Commission constituted by the Government of India. The purpose of the study is to provide comparative analysis of salaries/emoluments in the government sector vis-à-vis central public sector undertakings/ private sector in India. A basic framework to understand the salary differentials across various jobs and a template for the organisational and environmental factors affecting salary levels are prepared to provide foundation for the comparative analysis. The outcome of the study would help the Seventh Central Pay Commission frame its recommendations in line with its terms of reference. The specific objectives of our study are: > Develop the framework for identifying job families in the government sector and develop criteria to identify comparative job families in the Central Public Sector Undertakings and the private sector. > Based on job families, conduct comparative study of salary patterns (pay structure and component wise breakups, including benefits) between the Government and the CPSUs/ private sector. > Study the organizational/ environmental factors affecting pay levels across government sector, CPSUs and private sector and develop a conceptual map/ understanding of the interrelationship between organizational/ environmental factors and pay levels. > Based on (1.2.1), (1.2.2) and (1.2.3) above, an analysis of the compensation in government and its conceptual underpinnings. Initially, we identified a comprehensive list of sample job roles which are relevant for our study through a consultative method. Final job roles were identified in consultation with the Seventh Central Pay Commission. They were: nurses, physiotherapists, lab technicians, doctors (MBBS), doctors (MD/MS), dieticians, OT assistants, radiographers, teachers (PRT), teachers (TGT), teachers (PGT), principals (HS), scientists, technical staff (railways), account officers, graduate engineers, software developers, network engineers, system analysts, programmers, data entry operators, foremen, draftsmen, electricians, plumbers, welders, drivers, store-keepers, cashiers, clerks, library staff, secretarial staff, publicity staff, photographers and cameramen, receptionists, gardeners, and general helpers. In order to do salary comparison, CPSUs were identified, based on their classification and compared for similar job roles. We considered the given classification of PSUs as Maharatnas, Navratnas and Miniratnas as the basis, and all the three types of CPSUs were covered in this study. Private sector organisations were identified based on the following three criteria: (1) size of the organisation/ group, (2) main and related businesses of the organisations, and (3) presence in different categories of cities. In order to maintain job equivalence for appropriate comparisons, we have looked at jobs roles and job descriptions, rather than designations. To ensure validity, the organisations were also asked to verify the job roles and accordingly provide the data. In some cases, we also relied on information from public sources to compile the descriptions. We collected data by sending a master template to the organisations. The main part of the master template for data collection was related to (monthly) salary data. It included the following main components: Fixed Pay; Variable Pay; Allowances and Benefits; Employers’ Contribution; Non-Cash Benefits; and Additional Earning Opportunities. The master template provided an exhaustive list of sub-components for each of the above components. The sub components were identified based on available information and consultation with organisational representatives. The sample organisations filled the master template for the roles that were applicable to them. The roles and master template was sent through email to each organisation and then their doubts were clarified in person or through video call/ telephone. The policies considered relevant for this study were collected from each organisation. These included compensation policies, hiring policies, promotion policies, HR policies, wage agreements, etc. For each job role, detailed job description from each organisation was important to establish job equivalence. The information included minimum qualification and experience for the job, key responsibilities/ activities and key competencies needed. As the first step we have applied Job Points Model to the sample roles in order to understand the comparable worth of the jobs. Since government salaries are heavily position based, Job Points Model can be a good starting point. The key importance of Job Points Model lies in the following four points: (a.) to provide a structured basis to determine/ review salaries for various job roles; (b.) to not be overly influenced by socio-political factors but be guided by job and organisational requirements; (c.) to design/ review the structure and components of the emoluments and provide a basis for identifying factors that should be considered for increments, bonuses and allowances; and (d.) to provide a good framework for pay regulation and equity that is necessary in the government salary structure. Second, we have done comparison of salaries across Government, CPSUs and Private Sector Organisations. For this purpose, both primary and secondary data were used. Primary data is the key data used in our analysis. In order to collect primary data from the organisations, we developed a template for collecting salary and other details. Based on the responses, we have looked at the salary details for Government, CPSUs (Maharatnas, Navratnas and Miniratnas), and the private sector organisations separately. In jobs, where there is clear bifurcation of salary into high ranges and low ranges in the private sector, we have considered the two categories separately. In all the three categories, we have looked at the total salary and the following five components: fixed pay, variable pay, allowances and benefits, employers’ contribution, and non-cash benefits. Non-cash benefits are not included in the calculation of the total salary, primarily because of non-uniformity/ lack of clear information regarding its monetary value. We have also not considered additional earning opportunities (such as overtime, officiating allowances, ESOPs, etc.) since there was no uniformity among the companies. Fixed pay includes basic pay, grade pay (in case of Government), dearness allowance, etc. as provided by the organisations. Variable pay includes performance-related pay and bonuses not linked to individual performance. Allowances and benefits include house rent allowance, transport allowance, special allowances for certain jobs, etc. Allowances include cafeteria-based perks and allowances (45.5 to 49.5 percent of basic pay) as applicable in CPSUs. Employers’ contribution includes employers’ contribution to provident fund, pension, gratuity, etc. We have looked at the salary data at the entry year and at the third, fifth, tenth, fifteenth, twentieth and twenty-fifth years of experience. In order to further verify the private sector salary data, we have looked at the following three sources also: (a) Take-home salary from Paycheck.com (b) City category-wise salary details based on job advisements from online sources and newspapers, spanning across India (c) Official Minimum Wages data In the last chapter, we have provided figures showing comparison of salaries across Government, CPSUs, and Private Sector Organisations for fixed pay and total salary. In most of the roles studied here, salaries across Government and CPSUs are in similar range. In many of the roles studied here, government is paying higher salaries compared to the private sector, particularly in initial years, for jobs at the lower levels of skill-requirement and hierarchy. Salary in government is relatively lower compared to the private sector, particularly in later years, for some highly skilled jobs. In the final section we have provided a framework of factors determining level and components of salary based on the findings of our study. The five factors that emerged as relevant ones for determining level and components of salary are: career progression; potential learning on the job; supply over demand in the labour market; requirement of attracting top talent with excellent academic performance; and requirement of retaining key competencies. There is a lot of heterogeneity in the design and implementation of compensation system in the private sector. We have tried to be as broad based as possible in our data collection, in spite of the time constraints. However, there may be features and levels of compensation in the private sector that have remained unexplored in our study. The private sector compensation system is more dynamic in nature compared to government and CPSUs. It shows greater sensitivity to market conditions and implementation time to incorporate changes is short. Given that current economic conditions are sedated the salary in private sector would reflect that.

About the journal
Journal7th Central Pay Commission
PublisherGovernment of India
Open AccessNo