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Thursday, November 19, 2009
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The seventh national pay scale: An overview

FOLLOWING the cabinet approval on November 11, Finance Minister A.M.A. Muhith announced the much-awaited seventh national pay scale and allowances the same day for the employees in the government, semi-government and autonomous organisations. According to the finance minister's announcement, only pay hike will be effective from the first of July this year and the increase in allowances will be payable from the next financial year. A gazette notification to be issued this month detailing the procedure for payment of increased pay and allowances clear will make things clear.

The seventh national pay commission (NPC) formed by the caretaker government in October, 2008 to recommend pay structure for the employees of government, semi-government and autonomous organisations submitted its report to the finance minister on April 23, 2009. Immediately after the receipt of the NPC's report, the government formed a seven-member inter-ministerial committee headed by the cabinet secretary to review the proposals of the NPC and come up with its recommendation. The cabinet reportedly accepted the recommendations of this committee. Records show that no government in the past also accepted the pay structures proposed by NPC(s); rather inter-ministerial committees' recommendations on pay structures were accepted and implemented.

The table below shows the initial pay of national pay scale (NPS) 2005, initial pay recommended by the 7th NPC in its report of April 2009, and initial pay of the new national pay scale (NNPS) approved by the cabinet on November 11.

Pay scales of 1977, 1985, 1991, 1997 and 2005 show that the ratios between the initial pay for the lowest grade and the fixed pay for the highest grade were 1:13.33, 1:12, 1:11.11, 1:10, and 1:9.58 respectively. Those pay scales attempted to gradually reduce the disparity of pay between the public servants at the topmost and the lowest levels. In the new pay scale, the ratio between the initial pay for the lowest grade and the fixed pay for the highest grade has stood at 1:9.75. This is a reversal to the earlier trend and has thus invited criticisms. This could have been avoided by fixing the pay of the highest grade a Tk. 39, 500 and raising the initial pay of the lowest grade to Tk.4,150. In that case, the ratio would have stood at 1: 9.51 and the government could have avoided criticisms.

The new features of the NNPS announced by the finance minister include: (i) a separate pay scale for the judicial service for the first time in view of the separation of judiciary (subordinate courts) from the executive during the period of the last caretaker government; (ii) commitment for a separate pay scale for the education sector next time; (iii) different scales of pay for nurses having diploma and degree background; and (iv) education allowance between Tk.200 and Tk.300 per month for children of public servants.

It may be mentioned that granting education allowance to employees for the education of their children had been under consideration for a long period. Any way, certain criteria should be developed for implementation of the decision. One criterion may be that only those employees who have not more than two children would be eligible for this allowance. Records show that the increase in pension, medical allowance and some other allowances were common with every new national pay scale.

The pay hike of public servants has earned mixed reaction--the recipients mostly hailing and the experts warning of inflationary pressure on the economy and public life--while others are calling for pay rises for non-government and private sectors.

The implementation of the NNPS will cost the national exchequer an additional amount of about Tk.6,222 crore in revenue expenditure. The prime minister(PM) reportedly expressed her concern in the cabinet meeting that the NNPS might cause an inflationary spiral, leading to price-hike of essential commodities. Although the finance minister has tried to downplay the PM's concern about any immediate impact of the NNPS on prices of essentials, the critics don't agree with the finance minister's view. In their opinion, the pay-hike of the public servants 'emerges as the latest worry for inflation.' The rate of inflation went below 3 percent in June. It started increasing in July and rose to 4.60 percent in September. A four-member IMF mission that visited the country in last October 'warned Bangladesh that excess liquidity and resurgent international commodity and food prices might push inflation to double-digit by the year end.'

While welcoming the government's initiative to give better scales of pay to the public servants, the government is advised to revamp its revenue collection so that it doesn't have to increase borrowing from the bank for paying the increased salaries, manage the budget in a better way which may require, inter alia, putting a brake on all kinds of wasteful expenditures. In short, the government must make all out efforts to ensure that pay-hike of public officials don't lead to price-hike of essentials to cause sufferings to the common people as well as the public officials drawing pay in the lower scales.

M. Abdul Latif Mondal is a former Secretary. E-mail: latifm43@gmail.com

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