Pay inequality will rob private sector of essential skills


Illustrative purpose only

Standardisation of salaries may benefit civil servants but will not solve the problems of inequality in pay. It will widen the income gap between the public and the private sector.

Most of the private companies no longer employ school leavers, and instead insist on hiring graduates. It is left to the government to absorb those rejected by the private sector.

Standardising pay, a move that the government is working on, will see school leavers in the civil service earn almost as much as graduates enrolling in the private sector.

Standardising the wages will also lead to an increase in the salaries of graduates finding jobs in the government while the private sector will continue to pay the same scale to their counterparts. The inequality in pay will force the private sector to struggle to find the skilled hands it needs. It will lead to an imbalance in talent distribution between the two sectors.

No incentive
Another problem that is looming is that if a school leaver in the government earns as much as a graduate working for a company, then there will be no incentive for youngsters to study for their degrees.  

Also, there is a question of the school dropouts whom no one wants to employ. More than a quarter of job seekers are youngsters who have not completed their secondary school education. Their number is increasing every year.

No difference
The new government's plan is to get them into the employment system as fast as possible by enrolling them into vocational training courses.

With the new standardisation of wages, there will be hardly any difference in the pay of school dropouts with vocational skills and graduates in the private sector. Degree holders seeking to work in private companies will again start asking questions about the wage inconsistency. 

Directors of private companies are baffled but are waiting anxiously for a clarification about pay standardisation and how that will help them recruit new talent.

Many of them would remember what happened in the 1980s when all the graduates wanted to join the government because of higher perks. Efforts by the private sector to raise salaries saw the reverse happening in the 1990s when the government's own pay system became frozen.

Reminiscence
There will be persistent problems ahead if we fail to address the issue of pay inequality properly. For example, morale will start to dip in the private sector when workers with degrees get just OMR100 more than their counterparts in the government with no degrees. When this happens, their contributions to their employers will plunge to an all time low, a reminiscence of the 1980s.

The fact that the decision makers and the beneficiaries of the new pay structure in the government are the same, the private companies will always be left to fend for themselves. The private companies may argue that perhaps they need to have a say in this.

This is where we see the flaws in the legislation process since the private sector is not effectively represented in the top hierarchy. The wheels of economy are mainly driven by the efforts of the private companies.

If the directors of the companies start to lose momentum, they will tighten up their operational belts and ordinary employees lose their way.

The incentive for productivity is how much money you pay a worker. Such argument is not unfounded and will cause significant economic damage in the long run.

Pay inequality will reduce competence in the private sector when we already have a chronic inefficiency in the civil service due to overcapacity.

Besides, there is a question whether the government can afford the OMR900 million bill for salary standardisation.

A large financial outlay would have been shouldered by the private sector to promote skills where these are really needed to expand the economic growth.

There is no dispute that the effort to standardise salaries is meant to raise the living standards of the citizens.

One sided
However, in this case, it is one sided and the scale is tipping towards the government employees with the private sector not getting any benefits.

In conclusion, skills need to be equally integrated with no side under any extra pressure to keep the economy's wheels going.  The government needs to go back to play its role as an exemplary employer without draining away the skills from the private companies.

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The government salary standardization should be based on industry to do away inequality. There should be a survey what is the prevailing salary for rank and file, supervisors, or to any equivalent position vs the private sector. About the undergraduates, there should be a salary cap for them compared to graduates to incourage the youth to continue schooling for them to earn more. This process is called salary grading.



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