Saturday, September 29, 2012

Comparison; Wages In The Central Bank And Universities

In 2011, there were 1441 employees in the Central Bank and they were paid Rs. 2, 250, 029,000 as shown in the published accounts of the Bank. Then on average an employee was paid Rs. 1,560,000 per year, an average monthly pay of Rs. 130,000. Of all employees 11% were Minor Employees: drivers, peons and others.   Those not minor employees fell into two categories: Staff Class and Non-staff Class, roughly equivalent to professional and general service categories.  There were 646 employees in the  Non-staff Class and 629 in the Staff Class. There were 4 employees on fixed term contracts, who were not classified. That makes up the 1441.

Of all employees in the Staff Class, 17 percent [109 out of 629] had no post secondary education, whatever. Of them 83 were in Grade I, 23 in Grade II and 3 in Grade III and none in the highest grade, Grade IV. They are generally those promoted from the Non-staff Class on account of outstanding work in that class and promise of good work at higher level s of responsibility. Of all employees in the Staff Class, 28 [4 percent] had professional qualifications, without a first degree. Then 137 out of 629 [22 %] had no first degree. 248 [40 percent of 629] had only a first degree; 80 [13 percent] had a university degree and professional qualifications; 124 [20 %] had a post-graduate degree; and 32 [about 5 %] had a post-graduate degree and professional qualifications. Those in Staff Class who had qualifications beyond a university first degree comprised 38 percent of all in that class. Those with only a first a degree constituted 44 percent of the total, considering those with a professional qualification and no university degree as having obtained a university degree. Then 61 percent of the staff in the Staff Class had no education beyond a first degree from a university.
Let us try to establish the average wage paid to an employee in the Staff Class in the Bank. We know that the average wage of all employees was Rs.130,000 a month [2, 250, 029,000 (1/12, 1/1441).  Let us ASSUME that minor employees were paid on average Rs.30,000 a month. Their total monthly wage bill would be Rs.4,860,000. Let us also ASSUME that the average wage of an employee in the Non-staff Class was Rs.75,000,  2.5 times the average wage of a minor employee. They would be paid Rs.48,450,000 a month. That leaves Rs.144, 192,500 to be paid to 629 employees in the Staff Class, giving them an average wage of Rs.229,000 per month. That works out to three times the average wage paid to an employee in the Non-staff Class and about eight times the average wage of an employee in a the Minor Employee category. These multiples do not look grossly unlikely.

It is necessary to emphasize repeatedly that these wage rates are what I have ASSUMED that staff in the Bank are paid. I have used only figures available to anyone from published sources [Central Bank Annual Report 2011, page Part II-62] and I have not spoken to my friends presently in the Central Bank employ or were so employed at any time past. These figures are consistent with published accounts of the Central Bank for 2011.What is meant by consistent is that when any two wage rates are assumed, the third is determined for you with the residual obtained from figures publish by the Bank. There are three sets of staff, Minor Employees, Non-staff and Staff. Let us call their wage rates M, N and S. If you assume wage rates for M and N as I have done, S is determined for you. If you assume wage rates N and S, the wage rate M is determined. And if you assume wage rates N and S then the rate M is determined for you. It follows that if I have assumed too low a wage rate for minor employees [Rs.30,000 a month] , then the average wage for Staff Class is over estimated. If I have assumed too low a wage rate for Non-staff class, then too, the resultant wage rate for the Staff class is too high.  The argument can be extended with different assumptions, almost ad infinitum.

Consistency in that manner I have shown is no demonstration that the figures I have assumed are right. I think they are not far wrong. Of course, the Central Bank can advise the public the correct figures, much to the latter’s enlightenment. After all, it is their money and they have a right to know how they are spent.

To get back to the comparisons. The relevant category for comparison with university teachers is the Staff Class. All university teachers have at least a university degree, First Class or Second Class Upper Division and most have some post-graduate education.  In the Central Bank, 78 percent of employees in Staff Class have at least a university degree and 40 percent of them have had some post graduate education. A reasonable guess I have presented is that employees in the Staff Class receive about Rs.225,000 per month. This is also the average wage rate, which is paid to the 60 percent of employees   who have no more than a first degree and some less. We have learnt from Professor Amal Kumarage of Moratuwa that from October 2012, a Senior Professor, the highest level of employment as an academic in a university, will be paid about Rs.150,000 per month. A senior professor has one or more higher degrees, often including a Ph.D. degree, which is not true for staff in the Central Bank. That difference in wages does not seem fair and certainly seem wrong incentive-wise.  An assistant lecturer in a university, often with no more than a good first degree, will receive, Professor Kumarage  assured  us, close to  Rs. 50,000 a month, a far cry from what a new recruit to the Central Bank must be receiving.  A bright academic with a good first degree and a Ph.D. from a good Faculty has every incentive to take the first plain out of Katunayake. At the same time there is no clear evidence that there has been any large scale culling of staff at the Central Bank as they age, for whatever reason, including the search for higher wages. In 2011 no more than 11 [of 1441] staff members resigned from the Bank. If their current wages were too low, then there should have been a much higher turnover of staff. These wages are not essential to keep them employed at the Bank. The average age of employees in Staff Class Grade IV and III is 51 years and those in Grades II and I, 41 years. The latter category includes 106 persons [out of 472] who were probably promoted from the Non-staff Class and therefore older. If there were high turnover, we must see a much younger age profile for staff in this category. The argument concerning incentives will need more justification to hold water.  Work in the Central Bank is not fraught with unpleasantness greater risk to permit a higher risk allowance, to justify the higher wages.

The comparison between wages earned by employees in the Staff Class in the Central Bank and university academic staff make convinces me that university academic staff deserve relatively higher wages. The inability of universities to recruit some 3,000 [?] staff to its cadre year after year is evidence of poor wage incentives, among other things.

I have a more intimate knowledge of work in the Central Bank than in universities, although I am not completely unfamiliar with work in universities, either here or overseas or indeed, the history of universities anywhere over the last 800 years. I spent my first 3 years as an economist at the Central Bank of Ceylon and the Central Bank very generously provided for my education in Cambridge. I Iearnt the first letters of the economics alphabet in Peradeniya. I have always found universities very civilized places, havens in the midst of all the storms of noise and clutter outside. Walk through the tall gates of  Columbia College in Upper Manhattan, drive into Yale College in New Haven or walk into Colombo University and you  know you are in a place of civilization. Best of all are university towns. Drive into Swarthmore College about 15 miles out of Philadelphia, a huge city, Princeton in Princeton, New Jersey, through the great gates of King’s, Trinity or St.John’s in Cambridge  and many another to realize the validity of what  I say. So my loyalties are evenly divided between Central Banks and universities and this note bears witness to that tension. However, the comparison between wages received by employees in the Central Bank and in Universities makes me convinced of the case for higher wages to academic staff in Universities now.

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