How is Government's Employment System Broken?

Public Policy and Management

By Harshvardhan in thoughts

May 30, 2021

In 1858, after India’s first war of independence, the British Empire set up a new government executive arm — the Indian Civil Service. Trained at the University of Oxford, University of Cambridge, University of London and Trinity College, Dublin for two years, these elite executives were responsible for overseeing all government activities in the British Raj. Today, they train at Lal Bahadur Shashtri National Academy of Administration for two years with very similar content. Soon after, they join different departments of government and lead the personnel.

Anyone who knows IAS — the civil services is officially known as Indian Administrative Services since independence — would agree it requires significant reforms. India is world-famous for bureaucracy, and it shows up in whatever task you pick up to do. From registering birth certificates and transferring land deeds, you require these officers' approval for everything. In the past, the services have been accused of institutional corruption, inefficiency and misalignment, bribery, misappropriation of funds and abuse of power – least reported but most serious.

Here is what Carnegie Endowment for International Peace said almost five years ago:

The IAS is hamstrung by political interference, outdated personnel procedures, and a mixed record on policy implementation, and it is in need of urgent reform. The Indian government should reshape recruitment and promotion processes, improve performance-based assessment of individual officers, and adopt safeguards that promote accountability while protecting bureaucrats from political meddling.

All of these points are one hundred per cent applicable today.

Why is hiring government workers damaging to government treasury — at least in the present style?

Hiring a full-time employee as a civil servant is costly, slow and risky. The government has to train them as a jack of all trades, apart from high salaries and unreal retirement benefits. The process of floating recruitment notification, conducting exam and interviews, training has two years' lead time. Even then, their expertise would be limited compared to a consultant or economist or public policy expert who have been working for several years in this area.

Let me pick up the example of the most coveted government job — IAS. Once the combined results of the written exam and the interviews are out, higher-ranked individuals choose administrative positions, which means working as district collector, government secretaries, among others. The next popular choice is police service which gives India its police chiefs. Many other groups like forest officers, foreign officers (ambassadors), etc., all chosen from this exam only. Do you think a single standardised test can identify so many different kinds of officers reliably and correctly?

After an officer is hired, the government has to pay through its nose on multiple facets. In the name of job security, governments provide allowances that exceed the base pay. Dearness allowances aimed to tackle inflation, increase at rates much higher than actual inflation. Additionally, the base pay multiplies every few years. As the economists call it, the effective cost to the treasury doubles every four to five years.

The retirement benefits are immense. One is awarded an inflation-adjusted pension for life. After their death, the allowance continues to be rewarded for life. Most importantly, these officers cannot be discharged from their job. In case an officer is found breaking the rules, there is little that governments can do. You would likely be sent on a remote location post or suspended in a grave situation. Firing is virtually impossible.

All of this would sound like unlocking an achievement of immunity and security to a naive reader, which is how everyone in India treats a government job.

Non-permanent hirings might look expensive on paper. Typical job listings would have pay much higher than the base pay of government individuals. Because these officers are hired for shorter times with no permanent benefits, there is a significant reduction in cost to the treasury. Limiting off-pay slip benefits like pension, dearness allowances, among others, would reduce the exchequer’s bill.

Why are government employees are not equipped for handling modern administration and transformation?

Around 2014, many state governments sought the help of private players in transforming the state education system. In 2014, the Haryana government involved BCG to chart out plans for modernising state education. It tried various academic reforms in the curriculum, roped in multiple non-profits for regular funding and instituted weekly tests. Around the same time, the Rajasthan government also roped in BCG to channelise system-level reforms in its state education. The most impactful results were seen in Delhi education policy. I don’t want to get into the actual impact, as BCG documented it well here.

Delhi government’s case on improving education has proved consultancy is cheaper than public work for problem-solving. It worked out so well that then US First Lady Melania Trump included a visit to Delhi public school in her itinerary. In fact, at 97.8%, Delhi government schools scored the best results ever.

External consultants — bereft of bureaucracy — look at the problems differently than government employees. Today in India, consultants have thrived their business of expertise consulting at different levels of government. Governments working in perpetuity and consultants have become a convenient proposition that provides fast and accurate policy reports and policy analysis. My submission is to take it to the next step.

What is the way out?

The solution is easy to imagine and difficult to implement. Government should stop hiring for future positions. Instead, they should rope in interested people and private organisations to complete the same job. Next, the government should double down on lateral hiring and hire experienced and expert individuals at secretariat positions. Graduates from IIMs, IITs, JNU, etc., are suitable for the required functions if inexperienced graduates are necessary. Recent NITI Aayog’s hiring and Ministry of Finance’s hiring are glowing examples of how this process could work.

I got the idea to write this article because someone shared a picture of the health benefits of a government job with me. It showed how government pays for the employees and their parent’s health requirements. I quickly noted that such family insurance would cost ₹ 2000 per month. With five years of experience, one would earn a lot more working for a private company and easily afford the difference of ₹ 2000 per month. I had an urge to write my ideas in a post. Welcome to my TED talk. 😁