How my salary has grown over the years

Published: July 1, 2016 at 9:03 am

Last Updated on

With the government having approved the 7th pay commission pay hike for government employees, there is a furore and anger that the hike is not large enough. As with each pay commission, non-government employees grumble about how the govt servant is overpaid and not accountable enough.

Next month I complete 10 years of contiguous govt employment. I thought this might a good time to look back on how my salary has grown over the years for some perspective.

Some caveats: My pay scale that is not identical to the typical govt scale. It is a touch higher. However, the DA rates and increments are the same as all.

In this post, I am only listing the annulized increase in Basic+DA. My understanding is that these should be identical or at least close to the corresponding values for other cadres.

Annualized Increase in basic+DA:

5.03% –>July 2008 to  Oct 2009

Next month, Nov 2009 Basic+DA increased by 2.786 times due to the 6th Pay commission. My basic alone went by 3.29 times. Now the proposed hike in basic is only 2.57.

13.17% –> Nov 2009 to Sep 2012. This is the high inflation period and the bi-annual DAs were pretty steep!

In Oct 2012 I moved to the next scale due to a promotion and my salary increased by, hold on to your seats, an incredible 1.084 times!!

In other words, not much happened!

11.00% –> Oct 2012 to Dec 2015.

When inflation spiked, the salaries kept reasonable pace too. This is a fact and these percentages are nothing to complain about.

28.27% –> Jul 2008 to Dec 2015 (this includes one pay commission and one promotion- which amounts to not much). I double checked that number thrice(!) and still cannot believe it. This will not be same for all as the 6th PC hike was not uniform (if I recall right).

Sound great, but this is not wealth to rejoice as I have expenses all the time. So I won’t that number too seriously.

So why are government employees unhappy?

The actual quantum of salary received at the time of joining is the problem. A mid- or lower-cadre employee joining today would get a decent salary. I think there is no dispute there (from current employees. New guys may still crib relatively!).

However, for someone who joined in the 1990s (when India had teething money problems) or even in 2000s (economy was booming), the starting pay was quite small. Meaning they were just about able to make ends meet.

The high DAs were good but not enough because the basic itself was small. The government employee and his family members were suddenly drawn into a consumeristic culture where there was a compulsion to ‘keep up with the Joneses’.

Given the way Indians took to IT like a fish to water, chances are that one or even both Joneses were IT employees earning much more (and consuming close to that).

So the benchmark of a ‘good standard of living’ has gradually changed in India, with a sharp fork after the tech boom, separating govt and corp employee.

Consciously or subconsciously, the govt employee started comparing his salary and lifestyle with that of the corporate employee. Perhaps they always did, but the difference was stark now and ease with which people joined the IT industry probably rubbed salt into the wound.

Since the starting pay was small, subsequent pay commissions and promotions (if any!) were not enough to take the life of the government employee to the ‘next level’. They were just about enough to be a bit more comfortable at the same spot.

There is no way out of this! We will have to recognise that corporate employees are paid from profits and government employees are paid from revenue (arguably from borrowings, since our fiscal deficit is negative for most of the time).

Only if the government employee had the foresight to invest right and invest as much as possible and was lucky enough to actually do so, their net worth would have outperformed the percentages mentioned above. This is crucial because of shockers like this:

As mentioned above, the hike in basic in the 6th PC (for me) was 3.3 times. This time, it would be ~ 2.57 times.

If you compare 3.3 and 2.57, the hike is approximately 22% less!

Multiplying a 5000 basic with 2.57 and multiplying a 50,000 basic with 2.57 is mathematically the same, but not practically or psychologically!

For someone with a good current salary, this will not hurt much. For someone who is already having trouble managing expenses and EMI, this hike will hurt because they will have to wait another 10 years and who knows how much the quantum would be then!

This 10-year wait is the key problem. The increment +DA hikes (twice a year) are not the issue. The hike in total salary should be close to or even a touch higher than inflation. That is cold comfort for those who do not make enough.

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com
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