Govt job cuts? To lower revenue expenditure, Tamil Nadu mulls outsourcing

The Tamil Nadu government, facing a financial crunch lately, is looking at staff rationalisation, besides outsourcing or employing contract workers for non-essential roles as a way to reduce its revenue expenditure.

The state finance department has issued a government order setting up a committee to look into the staff structure and identify non-essential posts. It has also replaced the pay bands and grade pay applicable to state government employees and teachers with a new system adopted by the Centre; this has added Rs 147.19 billion to the annual cost burden.

According to the Budget documents, almost 40 per cent of the state's revenue expenditure during 2017-18 is accounted for by salary and pension. This, with an increase in pay, is expected to go past 50 per cent, so the state might have to go for cost-cutting measures, say sources.

In another order, the department replaced the existing system of pay bands and grade pay applicable to state government employees and teachers, including employees of local bodies, by a new system of level-based pay matrix similar to that adopted by the Centre for its employees with monetary benefit from October 1, 2017.

"The above revision was adopted on the basis of corresponding pre-revised pay scales and in spite of the immense fiscal stress, keeping the welfare of the government employees in mind. It was done under the recommendations of Official Committee, 2017, for an additional cost of Rs 147.19 billion per annum," said the order.

The government has constituted a staff rationalisation committee, chaired by S Audiseshaiah, a retired principal secretary of Tamil Nadu, to evaluate the staff structure in various departments and non-essential posts. The committee would also "identify the categories of posts which can be outsourced or appointed through contract appointment for an initial period as a measure to control expenditure," said the order.

The terms of reference of the committee also include consideration of any other relevant issue concerning administrative expenditure management in government and government agencies and make suitable recommendations. The tenure of the committtee would be six months, within which it shall submit the report to the government.

The move has already attracted much protest from employees’ unions and political parties. The Tamil Nadu Government Officials Union has sought that the state government withdraw its decision to set up the committee, stating the staffers are already under pressure with more work allocated because of various schemes. This has also raised concerns over plans for the nearly 250,000 posts lying vacant in various departments – whether there will be a moratorium on selection process is unclear.

The Opposition Dravida Munnetra Kazhagam (DMK) and Pattali Makkal Katchi (PMK) also opposed the move earlier in October last year, when the move was under consideration. DMK working president M K Stalin, according to reports, alleged that one could suspect that the state government was trying to cut down the number of permanent employees and no effort was being taken to fill the vacancies. “The move is to cut down government posts and implement contract employment or outsourcing in government jobs. This must be protested,” said PMK leader S Ramadoss.

In budget estimates for 2017-18, the government has allocated Rs 463.32 billion to salaries and Rs 205.77 billion to pensions and other retirement benefits – a cumulative expenditure of Rs 669.09 billion without including the expenditure due to implementation of Seventh Pay Commission recommendations. By comparison, the cumulative expenditure during the previous financial year was Rs 597.30 billion. The allocation in 2017-18 was 38.17 per cent of the total revenue expenditure. And, considering an additional expenditure due to pay revision, other periodic hikes and filling up of vacancies, a growth rate of 31.58 per cent was assumed for salaries and 34.37 per cent for pensions and other retirement benefits for 2018-19. Also, 10 per cent rise was estimated for both salaries and pensions in 2019-20, said the government at the beginning of 2017-18.