Thursday, March 13, 2014

Salary revision, what do you make of it?

Salary revision could widen inequality

The main idea of revising salary is to cover the increasing cost of living, to give justice to an individual’s income, and to ensure that the commodities he consumed yesterday are still within his reach today.

As a nation prospers, every working citizen who has contributed to that prosperity in his or her own little ways should be entitled a share of that increase in wealth in equal proportion.

Most importantly, inequality is unjust; it is a social disease, and it doesn’t bode well to the principles of democracy.

A nation’s wealth should not be measured by gross domestic product; rather, it should be measured by what kind of progress it has made in terms of reducing income inequality, poverty and unemployment.

The salary revision that the government promised may come through soon. It might even introduce a 20 percent housing allowances for the civil servants.

If salaries are revised based on the cost of living, it should also be increased by a minimum of 22 percent of the basic salary (As inflation averaged 22 percent since the last revision.)

This is where the system goes wrong, because instead of providing in lump sum, the revision is calculated on basic pay.

Inflation affects the poor more than the rich. So why are the rich entitled to a more revision than the poor? This doesn’t make sense.

The rich take home a higher basic pay compared to the poor. On the other hand, the poor would receive a lesser revision in their salary as it would be calculated on their basic pay, which is much lesser.

Price increases are always mostly concentrated on food and energy, the basic commodities that the poor have a higher propensity to consume. The rich doesn’t care about increases in the prices of food since a higher percentage of their expenditure are concentrated on areas like entertainment, electronics, garments, cars etc.

If need be, they could also always cut down on their entertainment expenses and devote that margin to be spent on food.

But the poor doesn’t have that option.

This widens the gap between the rich and the poor, and if this is not controlled, it could lead to a situation of relative deprivation, a disconnect between sections of rich and the poor.

This would slowly set the way towards social ills like crime, drug abuse, burglary, which are apparently on the rise today.

The government should therefore be mindful of such possibilities. If salaries are revised, let it be revised in such a way that the poor receive an equal amount compared to the rich in absolute terms and not calculate that on their basic pay.

If salaries are revised as 22 percent of basic pay, an individual earning Nu 10,000 basic pay would be entitled to a Nu 2,200 increase monthly, on the other hand, an individual earning Nu 40,000 as his basic pay would get Nu 8,000 increase monthly.

What do you make of it?