HRKatha gains exclusive insight into the perspectives of industry leaders, on the 7th Pay Commission. Rajesh Padmanabhan talks about how it could affect the Government workspace, consumerism and talent acquisition.
What’s your initial reaction on 7th Pay Commission?
This is a progressive step and a long-awaited one, which amends the imbalance that existed between the private and the public sectors. It’s certainly a bold and progressive step and a leap forward — kudos to the Commission.
It will uplift the social status of government employees—both central and state government personnel—with its cascading effect.
With the massive hike in HRA, it is expected that there will be a change in mindset and the real-estate sector will see an upswing. Employees, who are used to putting up at government accommodations, will now vie for their own houses with this sharp increase in allowance. I see this as a visionary long-term view that the Commission has taken, encouraging them to look at creating their own shelters through HRA, salary increase and affordable homes.
In addition, it will have a massive positive impact on consumerism as the disposable income will go up by over 20 per cent.
Next, OROP or ‘one rank one pension’, has its own pros and cons. It’s positive from a parity point of view. However, superficial promotion push-ups before retirement will be a caution I will advocate.
I am not entirely convinced, however, that the fiscal deficit is under control. I am assuming that the mathematics behind this is in place and on track. If that is so, then it’s a win-win for all.
Overall, an exciting recommendation by the Commission indeed!
Will the Government be able to attract better talent and also motivate its workforce once these recommendations are implemented?
Yes, I do think cleaning up of multiple allowances clearly indicates the need to move towards a more simplistic compensation architecture. This will do well for the entry-level talent acquisition.
Lateral hiring at specialist levels, from the private sector, in small proportion will be possible now, provided they amend the hiring laws and welcome external talent that make the workplace more inclusive.
In addition, reduction of the short-service commission stint in the armed forces— between 7 to 10 years— is a good feature to attract talent.
Do you think that government officials will be more accountable now, with the pay for performance scheme in place?
The abolition of grade pay and pay band is a big progressive first step towards ‘pay for performance’. In the years to come, we will see variable pay structures entering as a feature.
Keeping a check on the annual increase at three per cent also tells us that there is an eye on improving efficiencies in the long run.
Yes, I do spot design intents but there are no elements that will change and make the Government workspace a high-performing culture overnight.
What will be the impact of the corporate workforce and hiring?
Government PSUs are huge beneficiaries, as the gap is bridged a bit, when it comes to attracting talent from good institutions.
As the workforce of today moves more towards a ‘purpose’, the playing field is levelled as government roles will be increasingly driven by purpose and intent.
Having said that, I do see fungibility of talent— between private and public sectors— three years from now. The seeds have already been sown.
(Rajesh Padmanabhan is senior HR leader and former head of HR of a large Indian company.)