Sherlock Holmes I am not, nor is this a piece of detective work. Yet, it might just be a matter deserving the attention of a detective – a detective economist.
Ever worked in a government department, a PSU bank or perhaps a 'Navratna PSU'? No? May be you have a relative who does or did? Then you know what I mean. Our public sector economy is a strange breed. It is neither entirely profit-making,
nor is it entirely service-oriented. Generating employment is a supplementary, if not the primary goal of the public sector. What is the primary goal? God Knows! Perhaps they produce merely to fulfill per capita projections by the Planning Commission! It is a stale joke that some of them will save more money by closing down and paying workers their wages at home! To this day, these enterprises recruit for social causes, be it our ex-servicemen, our sportsmen, our handicapped, dependents of unfortunates who died in various natural calamities or accidents, or for that matter, disgraced IAS officers and quasi-political appointees.
With 'lifetime assured' positions, promotion assured by 'seniority' every few years, 15-30 days of scheduled and unscheduled holidays, subsidized loans, annual bonus and a union that bristles at suggestions to improve productivity, employees at PSEs almost own the place they work at – a virtual El Dorado. One would think they appreciate the largesse. To be honest, the really capable and willing, who don't feel adequately recognized or compensated, move away either to private sector employment or to opportunities abroad. It is the chaff that doesn't; these white and bluecollar employees band together and stage walkouts, dharnas, 'go-slow'(as if that were possible!) and strikes each year, almost
by rotation of calendar. If it is not the new pay scale, it is bonus; if is not subsidized home loan, it is subsidized vehicle loan; if it is not overtime working hours (where is the time to work during regular office hours?), it is the five day week. Unable to compete in the real world or earn promotion by skill enhancement, they seek to fill their pockets by demanding more benefits – uniforms and accessories, transport allowance, children's education, festival advances, subsidized lunch, tea break, smoker's break, sports and games facilities, ayudha puja, vacation travel allowance, vehicle loan, school
admission quota, ..... you name it, the list is endless. It grows every year as they seek novel means to squeeze more out of their employers. And to top it all, the demands can be 'politically leveraged' (blackmail, my friend, is a dirty word) if it happens to be an election year or the factional coalition government happens to rely on the support of the left! Only after these demands are accepted, do they slowly warm up to productivity-linked wages! How is that for strategy?
How do public sector enterprises earn profits in a market when their costs are high and wages rising? Good question. One would presume that they would, sooner or later, go belly up against private producers and imports. But we presume incorrectly. It so happens that India is a 'socialist' country and the 'socialist cause' is important; so important that the government subsidizes the unprofitable public sector firms by issuing bonds (a few tens of thousands of crores rupees worth, give or take a couple of hundred!) to cover the subsidy. Predictably, the PSUs turn the corner and report profits (Hmm, socialism is working!). Employees are happy with higher wages and benefits (Yes, we will vote en bloc!). Consumers are pleased with low prices (life is good, arre DD Sports laga de!). Low prices spur demand growth and keep the economy chugging. The bourses are lit up and the bulls are on a rampage! Good time for a midterm election!). And the pro-labor socialist government lives in to the second term (Yes, two terms are enough. The bonds mature in the third, just in time for the wretched capitalists to take over and deal with!). Hey, what more could you wish for? Hire and fire policy? Efficiency? Competition? Level-playing field? Long-run economic and environmental sustainability? Elimination of subsidies?
Who is that raving and ranting? ...... Calm down, Rao, don't get abusive!
(besides, you have children, don't you?)
