Thursday, September 4, 2008

Incentive-based pay set to debut with science & tech department

The Union government will soon offer an incentive-based salary package for employees of some departments and allow recruitment from the private sector on contract, in line with the recommendations of the Sixth Pay Commission aimed at reforming the bureaucracy.

The department of science and technology, or DST, has already moved to put in place an incentive-based system, said a senior finance ministry official, who didn’t wish to be identified. “Once DST implements it, we expect there will be pressure on other government departments to follow suit,” this official added.
The government on 14 August accepted the Pay Commission’s recommendations, offering 5 million employees an average raise of about 21%.

According to the same finance ministry official, the cabinet has laid down that any government department was free to put in place a performance-related incentive system provided that it is “budget-neutral”, meaning the expense will have to be offset through savings in other expenditure.

The Sixth Pay Commission carried out a study through the Indian Institute of Management, Ahmedabad, on a performance-based incentive system. The study was aimed at working out a model whereby a base salary is attached to each post based on skills and responsibility; simultaneously, a second component would be payable over and above the salary on the basis of the productivity and performance of employees, either individually or as a group.

The study recommended an annual bonus of up to 20% to employees whose achievements exceed certain targets; this has been accepted by the cabinet. The government has also given in-principle approval to contractual postings in government departments of employees hired from private sector. Their pay scales and other emoluments will be decided later.
According to the official, the impact had been partially mitigated since the allowances, which are a key part of the emoluments structure, are to come into effect only from 1 September. The full impact would be realised only in the next fiscal; the official declined to share the estimates and Mint could not independently confirm the same.

For women government employees, there are some sweetners. Women employees will now receive 180 days of maternity leave as against 135 days previously. This can now be extended to two years, made up of accumulated leave; earlier this had been capped at one year.

“Another two-year childcare leave has also been granted which can be taken in parts till children reach the age limit of 18 years,” the official said. According to the official, this was the first time such a facility was being extended in government and had been modelled on what has already been adopted in Japan.

The government is also working out details to pay special allowances to paramilitary forces in line with the Rs6,000 per month allowance given to military personnel. Asked whether allowances for the paramilitary forces will be at par with the armed forces, the official said, “We would like to give an edge to the defence forces.”
The official also denied news reports that government has decided to tax 100% arrears that will be paid to government staff. The official said that as government employees will receive only 40% of arrears during the current financial year, they have to pay tax on only this amount.