This time the government appears to be less worried about money to support a new pay-scale which has doubled---in some cases more than doubled---the pay and allowances of its officials and employees. The government is enjoying a good time in managing its income and expenditure as more taxes are to be collected and no subsidy is being given to the previous subsidy-guzzler,the Bangladesh Petroleum Corporation, owing to a drastic fall in oil prices in the international market. It is said the money being saved on petroleum import will be almost enough to support the new pay-scale which will need extra Tk.150 billion. As the government wants to implement the new pay-scale over a two-year period, another additional allocation of Tk.100 billion or around that figure will be needed next year to implement it fully.
There are some basic features in the new pay-scale which were not there in the old ones. For example, henceforth the officials and employees will not be classified as gazetted or non-gazetted ones or among gazette officials, as the first class or the second class officials. Rather they would be classified in terms of grades they hold on the job ladder. There are 20 such grades, the first grade comprising the officials holding top-most positions in the government and the tenth grade means lowest position in terms of holding the positions. Again, there will be no fixed amount of yearly increment in the salaries of officials and employees. Rather they would be enjoying yearly salary increment in terms of percentage of the basic salaries. Also the government contemplated that from now on, there would be no pay commission. The pay structure once announced and accepted will automatically move. Yearly percentage increment may not remain fixed depending on the rate of inflation in the economy and also depending on the yearly growth rate of the economy. All these sound good, but once the government starts implementing the pay-scale, new problems might arise.
However, those who got the new pay-scale have reasons to be happy. The newly-announced pay-scale doubled or more than doubled the basic salaries, which, we believe, even the beneficiaries also did not expect. As the officials and employees will get more, nobody should object to that but the nation should consider some issues while paying for the new pay-scale. Are all officials and employees fully employed in the government or are some of them redundant or under-employed and the nation is paying for them for nothing? In economic science, there is a difference between 'employed' and 'underemployed'. Underemployed is one who does not work to his full capacity but gets paid.
Though there was no recent study on the extent of underemployment among the government officials and employees, many want to say it will not be less than one-fourth of the total employees under government payroll. This means, the government can do away with roughly 3,00,000 employees and will still have the same services from the remaining ones under the government payroll. It also means, the nation is paying for nothing for the extra employees without receiving any commensurate services from them. There was a time, in the beginning of the 90's when persons of high positions used to talk about the need for the right size of the government. The donors made it an agenda for the Bangladesh government. But now that issue is a forgotten one, and over time the government only grew in size though more and more jobs are being done by the private sector in the economy. The culture of a big government, which we got as a legacy from the days when the public sector dominated the economy, still remains with us. Our political leaders love to have more ministries, more directorates, more divisions and more employees for additional government structures.
Had the size of the government been smaller than what we have now, the new pay-scale would have been less burdensome on the tax-payers and the people in general. One question being debated is whether the new pay-scale will be inflationary or not. It will depend on how the additional money required for the new pay-scale is supplied. If borrowed, definitely that financing will be more inflationary. Actually, some sort of inflationary pressure will be felt in the economy no matter how the new pay-scale is financed. In economic science, there is a notion called 'demand-pull inflation' which means prices will go up if there is an upward rise in the demand side of the economy. Of the additional Tk 150 billion needed to finance the new pay-scale, a substantial amount will be spent by the beneficiaries on the consumer items.
The prices of consumer items will go up; the difference will be in degrees depending on timing and circumstances. Another pertinent question is whether people such as old and retired people who are disconnected from any earning sources will be able to cope with the rising prices. Definitely the new pay-scale will put them under a more disadvantageous position. Also, the hope of having less corruption from the government employees through pay rise will remain a daydream only. In the past, this objective was not achieved by increasing salaries. Corruption is a culture for the corrupt employees. They will not give up resorting to corruption no matter what their salaries are.
The writer is Professor of Economics University of Dhaka.
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