PRB & MPs Pay — Who gets which pay?

The Pay Research Bureau (PRB) made its latest recommendations into the pay structure and conditions of service in the public service in March 2016.

It is customary for the institution to also make recommendations for pay adjustments of legislators and certain other public bodies not covered by the PRB, after the public service exercise is done. This was done in 2013 and now again after the PRB 2016. The aim of this additional exercise is to align legislators’ pay and that of others in quasi-public bodies with changes made in the salary structure of the public service.

The recommended adjustments in respect of the political establishment – the President and Vice President of the Republic, the Prime Minister and Deputy Prime Minister, Ministers and deputies — was published by one newspaper on 20th May, that is, the day on which the recommendations would be presented to the Cabinet. The comparative table showed, amongst others, that the highest pay was that of the Prime Minister (Rs 540,939 – Rs 556,394 per month). Ministers were to be remunerated in the Rs 337,554 – Rs 347,598 monthly range. This reflected increases ranging from 5 to 8% compared with 2013.

A public debate ensued on the merits of these levels of remunerations to politicians on both sides of the House. There were those who felt that the amounts looked too much on the high side. Others pointed out the sharp difference between the take-away pay of politicians and the “miserly” salaries paid to workers at the lower levels of the workforce, whether in the private sector or the public sector. Taking the cue perhaps from these criticisms and to allay any negative public perceptions of themselves, certain members of the opposition stated that they would ask for reductions in the remunerations proposed for them.

Obviously, the passion generated by the debate obscured from view that like was not really being compared with like. It is a fact of life in all countries that there are differences in the pay of workers at different levels. ‘Statistics Mauritius’ points out that, for the year 2015, the highest occupational group of the country, notably chief executives, senior officials, technicians and legislators, earned a monthly average income of Rs 36,000. Another grouping called ‘clerical and support workers’ was paid a monthly average of Rs19,200 whereas the lowest occupational group, ‘Elementary Occupations’, had monthly average earnings of Rs10,000 only. Of course, these averages conceal the fact that the few highest paid workers in top occupational group, for example, would be receiving monthly income in the several millions of rupees, far removed from the average figure of Rs 36,000 for the entire group.

The question of disparity of earnings among different classes of workers is a widespread concern. For example, after the debacle set in motion by the international financial crisis of 2007-08, the question was repeatedly asked as to how the very bankers who had brought the financial system to ruin were actually the most rewarded of all classes of executives. They had so mismanaged their banks that the governments of different countries had to inject massive amounts of capital in world renowned financial institutions they had been in charge of running, to keep them from sinking steeply.

In capitalist countries, it is assumed that pay is related to performance. In other words, there would be some rare pearls among the top executives who get paid on terms dictated by the market. The supply of such talented rare pearls would be so limited on the market that, were they paid a lower amount by one institution than what they believe they command, they would shift to the other and get the remuneration they “deserve”. Loyalty is a virtue of the past, in such crude capitalism. Pressures of the sort keep hiking pay packages at the top on the basis of what is called the ‘transfer price’ of such individuals.

But that is not the case at the middle and lower ranges of occupations. Workers are typically in excess supply at these levels. The consequence is that, given this situation of over-supply of workers in these categories, there is a reverse pressure to drive down the rate of remuneration in their case. The free market system states however that should the excess supply dry up at some stage, e.g., when there is full employment, there will be a pressure for wages at such levels to also go up.

As that doesn’t happen frequently enough, governments step in to legislate minimum wages for certain categories, to ensure that workers are not driven to the bare minimum or even lesser positions by so-called free market forces. In turn, where prescribed minimum wages affect prices of internationally traded goods produced by the concerned workers to the country’s detriment, governments step in to support such activities by granting subsidies, at the risk of being subjected to international trade sanctions for “dumping”, i.e., selling below cost of production in a bid to secure market shares. Obviously, there are limits up to which governments can raise taxes or debt to support such subsidies.

One has to grapple with such realities when discussing the relative wages of different categories of workers.

Coming back to the pay packets of the politicians themselves, there may well be a few who command a higher ‘transfer price’ in other occupations than what they are actually being paid as parliamentarians. In corrupt countries, once in power, politicians can make good “losses” they incur in the process, so that they are more than amply rewarded for the opportunity forgone. But there may also be larger hearted individuals who are prepared to take the sacrifice, minus any corruption. These are the truly ‘conviction politicians’. Manmohan Singh, the previous PM of India, agreed to serve as Minister of Finance of India in the 1990s for a symbolical remuneration of Re 1 a month. There aren’t many made of the stuff he’s made of.

Most people – especially the richest — labour under the assumption that misery could hit them hard sometime in the future. They employ every opportunity they get to garner as much money and wealth as possible, by fair or foul means even. This explains why the super-rich of the world have been getting even richer. What for? Just in case fortunes were to take an adverse turn, they believe, they would be able to ford up the “speculative” misery they would fall into. This causes them to squeeze out the maximum they can from those lower down to their own benefits. It explains also why we keep having a permanent under-class in societies.

Lee Kwan Yew once said in answer to a question about the high remunerations the government of Singapore was paying to its parliamentarians that it was his aim to get the best brains in government before Harvard or Yale or a brilliant international company picked them up for an even better remuneration. He said that loss of such real talent would be a loss to Singapore in its ability to make and implement the policies it needed to make the country shine even better in the international firmament.

Can we not rise to this kind of ambition for our country, throwing aside for good the stupid clannishness that has sometimes even destroyed what good work past generations had realized? Who will then grumble about whatever remuneration is being paid to truly performing parliamentarians?

 * Published in print edition on 27 May 2016

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