12:00 AM, August 31, 2010 / LAST MODIFIED: 12:00 AM, August 31, 2010

Separate pay structure for Bangladesh Bank

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M. Abdul Latif Mondal


Photo: Keith Brofsky

Aseparate pay structure with a steep rise in the pay and allowances of the officials and employees of Bangladesh Bank (BB) has been in the news for the last few months. While Finance Minister A.M.A. Muhith favours a separate pay structure for BB the bureaucracy opposes it, fearing a total breakdown in the centralised pay structure in the public sector, particularly in 23 or so regulatory bodies.
A look into the emergence of a centralised pay structure shows that when the first National Pay Commission (NPC) of Bangladesh was constituted on July 21, 1972, there were 2,208 scales of pay in the public sector of the erstwhile central government of Pakistan and the provincial government of East Pakistan. The first NPC squeezed 2,208 scales into 10 grades and scales of pay.
This created enormous problems in adjusting such a huge number of scales into 10 grades and scales only and, as a result, the government could implement the lower grades and scales, i.e. grades and scales 5 to 10 only.
The second NPC, formed on February 20, 1976, recommended 52 grades and scales of pay. But the government reduced them to 20 grades and scales. The subsequent NPCs, including the 7th NPC constituted by the last caretaker government, recommended retention of the 20 grades and scales.
In the past 30 plus years, public sector officials have adjusted themselves to the centralised pay structure having 20 scales. Their demand to the successive NPCs generally had been for a steep rise in their pay and allowances so that they could have an honourable living.
During the time of the last caretaker government, BB submitted a proposal to the finance ministry for introducing a separate pay structure, which was almost similar to that of the Reserve Bank of India and the State Bank of Pakistan. The caretaker government did not approve the proposal stating that there would be disappointment among the officials of regulatory bodies and other public sector organisations if a separate pay structure was allowed for BB.
In the first half of this year, BB again submitted a proposal to the finance ministry for a separate pay structure for its officials and staff. Available reports suggest that BB proposed Tk. 66,700 monthly pay for Executive Director (ED), the third tier in the hierarchy of that organisation, the first and second tiers being the governor and the deputy governor respectively.
Following the deliberations in the meetings of the secretaries' committee headed by the cabinet secretary, the finance ministry recently asked BB to submit the revised pay structure proposal on downsizing its existing salary grades to almost half as part of formulating a separate pay structure.
A report in The Daily Star (DS) of August 26 suggests that, following the finance ministry's letter, the BB Board of Directors approved on August 25 a separate pay structure with 9 grades, trimming down the existing 20 grades, for sending to the finance ministry. The DS report says that the monthly basic pay of an ED has been proposed at Tk. 66,000, up 79% from Tk. 33,500, the pay granted by the 7th NPC. His gross monthly salary will stand at Tk. 93,000.
An entry-level officer (Assistant Director) will draw Tk. 20,000 as monthly basic pay and his gross salary will be Tk. 32,000. The monthly basic pay for the staff at the lowest grade has been proposed at Tk. 7,000, while his monthly gross salary will stand at Tk. 15,200.
The arguments put forward by BB for proposing a separate pay structure with steep rise in pay and allowances are:
* As the central bank of the country, BB should have a separate pay structure that corresponds to the salary structure of the central banks of the neighbouring countries;
* A separate pay structure with attractive pay is needed to attract talented and experienced officers against the backdrop of high salary in private commercial banks.
The finance minister favours a separate pay structure for BB, saying that the present government is committed to introducing a separate pay structure for BB. The basic question is whether we should continue or not with the centralised pay structure, which has taken deep root in public sector.
The government has from the beginning kept only two public sector commercial organisations -- Biman Bangladesh Airlines and Bangladesh Shipping Corporation -- outside the purview of the centralised pay structure. This is because these two organisations have to maintain international standards to compete with other national carriers. Even their pay structure is approved by the finance ministry.
Critics say that BB's argument for a separate pay structure corresponding to salary structure of the Reserve Bank of India and the State Bank of Pakistan does not appear to be convincing. Both India and Pakistan have a federal form of government where centralised pay structure in the public sector is not feasible. Bangladesh has a unitary form of government where a centralised pay structure in the public sector may function reasonably well.
The critics also point out that a separate pay structure for BB with a steep rise in pay and allowances will create dissatisfaction among the officers and staff of government offices, corporations and other regulatory bodies. If an ED, who is in tier 3 of BB, is allowed the monthly pay of Tk. 66,000, then what will be the pay of the governor? The governor is now in the pay and grade of the secretary to the government (present monthly pay of a secretary is Tk.40,000) and they are in the same article of warrant of precedence.
Again, if an assistant director, an entry-level officer, is given monthly pay of TK.20,000, then what will be the pay for the entry-level officers (present monthly initial pay is Tk.11,000) in the Bangladesh Civil Service (BCS) cadres? The brightest boys and girls of the universities and colleges have to face a very tough competition for recruitment to various BCS cadres. What will be the pay scale of a lecturer, an entry- level post, in a public university? Many such examples may be cited.
A separate pay structure for BB officials and staff with a steep rise in pay and allowances may encourage other government departments, corporations and regulatory bodies to raise their demand very strongly for separate pay scales with higher pay and allowances, and it may be difficult for the government to cope with such a situation.
Political consideration must not take precedence over other more important considerations. Rather, the government may go for gradual enhancement in the pay and allowances of public sector officials and employees, taking into consideration the increase in the cost of living, so that they can have a decent living. Rightsizing the public sector as a whole may help government attain this.

M. Abdul Latif Mondal is a former Secretary. E-mail: latifm43@gmail.comllatifm43atifm43@gmail.com

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