Pay Commissions - Are they necessary?

Manmohan assures support to Air India
Vinay Kumar
But it should become leaner, trimmer

NEW DELHI: Reeling under an unprecedented financial crisis, national carrier Air India was on Wednesday offered a glimmer of hope, as Prime Minister Manmohan Singh assured government support to the airline. The condition, however, is that it should undertake a comprehensive restructuring process and should become leaner and trimmer.

Civil Aviation Minister Praful Patel, who met Dr. Singh on Wednesday along with top ministry and airline officials, pleaded the case for government support to the carrier. He said the Prime Minister gave it a “sympathetic and patient hearing.”

Addressing a press conference later, Mr. Patel said Air India has been asked to submit its plans for comprehensive restructuring at the earliest before a high-power committee of secretaries, to be headed by the Cabinet Secretary. It would undertake a monthly review of the plans.

“The Prime Minister has said the entire weight of the government is behind Air India. It is a national carrier and it is our pride. But there is conditionality that Air India must put its best foot forward. The employees must realise that there is a problem, and that it is a cumulative problem,” Mr. Patel said.

He said Air India would need to shed flab and undertake a lot of restructuring from within, organisationally, financially and manpower wise. Until serious steps are taken to improve the functioning of the airline and make if financially viable, it would be difficult for the government to back it.

No bailout package yet


However, he did not give any figures for the bailout package, and said Air India must first submit its restructuring plan and proposals. “All figures appearing in the media in this regard are hypothetical and may be based on some sectional views of departments,” Mr. Patel said.

Replying to a query, he said the first set of measures could come after a month, and it could take about two years as a turn-around period for Air India. Mr. Patel said it would not mean “open-ended cheques” from the government.

“Perform or Perish”


While appealing to employees to desist from any plans of a strike, as it would only “hasten Air India’s demise”, he said his message to the 31,000 employees was clear: “Perform or perish.”

Pointing out that the global civil aviation scenario was also “grim”, and international carriers like British Airways were also finding it difficult to put down their losses, Mr. Patel said: “These are extraordinary measures being discussed by the government, and Air India has to come up with equally or more extraordinary measures and live up to the expectations of the government.”

To another question, he said that as an interim measure, the government could give financial assistance at any time, and it could be in any form.


Mr. Patel said the government would reconstitute Air India’s board, bring in independent, eminent persons as directors, and even change or reshuffle functional directors.

On acquisition of new aircraft, he said a majority of jetliners were meant to replace the ageing fleet. “It is a Catch-22 situation; if you continue to fly 20-year-old planes, how will you remain competitive?” While Air India’s equity base is put at Rs.145 crore, the working capital is about Rs.15,000 crores. It runs up a wage bill of Rs.350 crores every month, and efforts are on to reduce it drastically.

Every five years or so, our Central Government goes on a spending spree as if it was Santa Claus and doles out salary increases to its employees under the awards of the Pay Commission. This sets of a chain reaction where all semi government and quasi government and PSU and state government employees start agitating for similar pay increases.
The government then begs, borrows or steals to fulfil the new wage structures. The Central Government can print notes which it goes about printing merrily. But the poor state government who do not have the authority, have to go with begging bowl to the centre.
The organised private sector have to bear the brunt of the dissatisfied employees as they can neither print notes nor go to the centre with begging bowl.They have to go to their banks and their interest charges increase.
The worst affected are the unorganised sector who do not have a regular source of income and find themselves poorer with each pay commission award.
What we are seeing with the Air India employees employees taking a voluntary salary cut is the result of all this pampering of its employees by the government.
All government employees get their salary as Basic + DA + Different allowances.
The DA part takes care of any inflation in cost of living.
Then I don't see the necessity for increasing their salaries by about 30%to 50% every 5 years through Pay Commissions.
The sixth pay commission award will increase the annual central government salary bill by Rs 8000.00 crores and the bill for retrospective salaries would come to around Rs 18000/- crores.
This is only for the central government.
If we consider, all the state governments and quasi governments the bill will be annually Rs 24000/- crores.
Instead of fattening the already fattened pigs , wouldn't it be better to use the money for the adivasis and poor people who are committing suicides as they can get hardly get one square meal.
Maybe, then we will have fewer Maoist and Naxalites and the security cost of our VIPs could decrease.