CEO salaries are in the news. But all the attention is on the wrong kind of CEO salaries. There is always an embarrassing moment in interviews with chiefs of public sector corporations — when the issue of their pay comes up. Increments typically add a princely sum of Rs 50,000 to the average annual salary of a public sector chief, which is below Rs 6 lakh in the year 2007.

To get a better perspective, just place that figure besides the annual salary of the driver or the peon in the same public sector company. It is usually about Rs 2 lakh. To round off that perspective, just note that the cumulative investment these ladies and gentlemen manage as on end March 2006, was Rs 3,93,057 crore. That is over 12 per cent of the GDP.

As the economy has taken off, it has created a massive flight of personnel from the public sector to the private sector companies. The situation is particularly bleak for the banking and insurance sector enterprises where there is a resignation almost every week. Companies are unwilling to share figures but informally they acknowledge having lost almost 30 per cent of their key personnel in the past few years.

Is there any surprise that 16 central public sector undertakings have vacancies at the top for more than a year, sometimes due to administrative delays, but more often because there are few takers for these companies. Companies such as Container Corporation, RITES, ITDC and HUDCO either don’t have all functional directors in place, and another half a dozen PSUs don’t have chairmen and managing directors. The problem is not that the private sector is paying too much to its employees. It is that salary level for the well performing public sector enterprises is just absurdly low. The five or seven year ritual of pay revision is adding so little to the package that it does not cover inflation.

... contd.