“In choosing careers, young people look for signals from society, and Wall Street will no longer pull the talent that it did for so many years,” said Richard Freeman, director of the labor studies program at the National Bureau of Economic Research. “We have a great experiment before us.”
With poll calculations dominating the UPA government’s agenda, the more than four million-strong central bureaucracy is in for a windfall. The Sixth Pay Commission’s recommendations, given to the finance minister on Monday, could mean a revision in pay and allowances that can range from 40% to 60% if all benefits are taken into account.
The recommendations are likely to be considered soon by the Cabinet. Finance minister P Chidambaram had made necessary elbow room in his Budget speech last month, while the railway budget included a provision for implementation of the report presented by Justice B N Srikrishna.
The report is expected to be welcomed by the babus as well as defence and paramilitary employees. As reported earlier by TOI, the highest pay in the government has been pegged at Rs 90,000 for the cabinet secretary, while a secretary would draw Rs 80,000 a month. The three service chiefs would get the same salary as the cabinet secretary if the recommendations are accepted.
Although the commission claimed a 1:12 lowest-to-highest pay ratio, the biggest beneficiaries would be officers of the level of joint secretary and above, giving the recommendations a pro-IAS tilt. The benefits for other central service officers, especially at director level, are not so attractive.
The government would be pleased to offer benefits to the vast bureaucracy, seen as an important constituency. Just as farmers have a loan waiver and the middle class higher tax exemptions, the Pay Commission report is a sop for government servants. It is likely to be extended by state governments to their employees as well. Haryana chief minister Bhupinder Hooda had already promised to do so.
I don't think anyone understands the impact of this on the consolidated expenditure of centre, states, local government, autonomous bodies, grant-in-aid institutions, etc.
Including railway workers, who comprise one of the world's biggest payrolls, India's central government employs around 3m civil servants and the states another 7m. They include vast armies of paper-shuffling peons. The number of senior “Category One” bureaucrats—broadly speaking, “decision-makers”, according to Satyananda Mishra, boss of the Department of Personnel and Training (DPT), which runs the civil service—is only 80,000. And the elite IAS, which mostly runs India, numbers a mere 5,600.
Its ranks include almost all the collectors of India's 604 districts, and over 60% of senior officials and managers working in government ministries and publicly owned corporations. (The rest are mostly police and railway officers.) As the successor to the colonial Indian Civil Service—the “steel frame” of British rule, according to one prime minister, Lloyd George—the IAS was designed to perform the same unifying function. It is a national and permanent service, theoretically apolitical, and recruited and trained at the centre. Yet its members serve mostly in the states—the main exception being 600 of the most senior babus who, in Whitehall fashion, advise ministers and draft policy in Delhi.
Across India, the IAS commands both reverence and contempt. Male recruits are among India's most marriageable: more suitable, it is said, than the elite geeks of the country's booming computer-services industry. Indeed, India's recent run of 8% economic growth has if anything increased their prestige, by creating more senior positions for which IAS officers are required. This year 140 people will be recruited into the IAS from around 200,000 applicants, one of the biggest intakes ever.
Yet the steel frame has now become a serious bind on badly needed reforms. As the author of a typical recent IAS history and former mandarin, Sanjoy Bagchi, puts it: “Overwhelmed by the constant feed of adulatory ambrosia, the maturing entrant tends to lose his head and balance. The diffident youngster of early idealistic years, in course of time, is transformed into an arrogant senior fond of throwing his weight around; he becomes a conceited prig.”
Summary: Using panel data for the fourteen major states of India over the 1980-2000 period, the authors estimate the effect of human capital endowment on the performance of the state economies. They find that greater availability of skilled workers had a positive and significant impact on output in the service sectors. They do not find any such effect for the manufacturing sectors. The paper shows that the differential effect on services and manufacturing arises because service sectors are more skill intensive.
The question of "free" versus "fair" trade, has three baskets: an environmental regulation basket, a labor-standards and freedom basket, and a "wages basket."...
There is a good chance that China is now on the same path to world preeminence that America walked 130 years ago. Come 2047 and again in 2071 and in the years after 2075, America is going to need China. There is nothing more dangerous for America's future national security, nothing more destructive to America's future prosperity, than for Chinese schoolchildren to be taught in 2047 and 2071 and in the years after 2075 that America tried to keep the Chinese as poor as possible for as long as possible.
THE Rudd Government should scrap dividend imputation credits and instead reduce the company tax rate by about a third if it wants to increase investment in Australia, according to a tax expert and former Labor government adviser.
Nicholas Gruen, chief executive of Lateral Economics and Peach Home Loans, said dividend imputations — which allow companies to pass on to shareholders the benefit of Australian tax paid on profits — cost $20 billion a year but did not substantially improve a company's cost of capital.
Speaking at the Committee for Economic Development of Australia's tax forum in Canberra yesterday, Dr Gruen said imputation credits were an inefficient form of tax expenditure.
"The evidence suggests that it doesn't increase share prices," he said. "If you got rid of dividend imputations and spent the $20 billion on reducing company tax rates, you would make the shares much more attractive to foreign shareholders … The price would go up a lot and the cost of capital would go down."
Dr Gruen, who worked as an economic adviser to John Button as industry minister and John Dawkins when he was treasurer, said the $20 billion in tax revenue gained could then be used to lower the company tax rate from 30% to about 19%.
The Corporate Tax Association's executive director, Frank Drenth, and PriceWaterhouseCoopers partner Tim Cox expressed reservations about scrapping the system, saying dividend imputations helped the Tax Office monitor whether companies paid tax.
The forum also included a panel discussion on how to increase workforce participation. Australian National University research fellow and economist Andrew Leigh said Government should consider earned-income tax credits, which are used in the US and Europe. The credits are paid to low-income earners to provide incentives to work.
Ann Harding, director of the National Centre for Social and Economic Modelling, cited research released last year estimating that 910,000, or 7.1%, of working-age Australians faced an effective marginal tax rate of more than 50%. She said it was difficult to eliminate the problem, where people who earned more money faced the loss of government assistance.
A shipyard in the US state of Mississippi is accused of using a "guest worker" programme to exploit hundreds of workers from India.
Unhappy with that C for your school on the report card? Think that the “instructor” didn’t take all the proper measurements under consideration? Consider it unfair and misleading? Do what every student unsatisfied with his or her grades would consider: appeal. That’s the tack the United Federation of Teachers is taking.
During a breakfast speech on Thursday to the Association for a Better New York, Randi Weingarten, the union president, presented a detailed proposal on report cards for schools. Instead of assigning one blunt letter grade, as the city report cards did, the six-page report would grade schools on four areas: academic achievement, school safety, teamwork between teachers and administrators and support from the Department of Education.
Ms. Weingarten, who has criticized the report cards in the past, said that the more nuanced way of judging a school would be more accurate and fair than the city’s A-through-F system. She took great pride in the proposal, noting that the union had poured over the details for months and later calling it one the most “thoughtful and reflective” proposals of her career.
In what she called the most controversial part of the proposal, Ms. Weingarten suggested that the Education Department also be judged on what kind of support they provide to schools, from how much money spent on each student to class size and staff access to computers and student data.
New York City Mayor Michael R. Bloomberg told World Bank Group employees in Washington Thursday that "the free, global movement of labor, capital, and ideas" was essential to his city's growth over the past 30 years and its comeback from 9/11, and an object lesson for cities everywhere.
Bloomberg praised the impact of immigrants on his city, where 3 million residents - 37 percent of the population - are foreign-born.
"Their ambition, hard work, and entrepreneurial drive continue to bring dynamic new life to our economy and a fresh new spirit to our city," Bloomberg said. "New Yorkers understand that. Even after 9/11, when it would have been understandable for us to become fearful about the rest of the world, we have continued to welcome immigrants at a history-making pace. And they have more than repaid us."
He said that other cities can reach toward New York's success by adopting what he called its four values: "harnessing the forces of immigration and globalization; tapping the power of innovation, instituting rigorous and accountable governance; and having the independence to take on entrenched interests when they stand in the way of progress."
New York, he said, is using innovative conditional cash credits (CCT) to help some of its poorest citizens climb out of poverty. CCTs, first introduced in Latin America with World Bank support, have become a global phenomenon. Under CCT's, the poor get direct cash if they meet certain education and health benchmarks.
The mayor said New York, along with more than 700 American cities, was taking an innovative approach to slow climate change by pledging to meet the carbon-reduction standards of the Kyoto protocol - in contrast to the U.S. government, which is the only major developed nation not to sign the document.
"Increasingly we're working in concert with one another, and adopting one another's best practices in areas ranging from 'greening' our streets to cleaning our air," Bloomberg said about New York's collaboration with other cities on climate change.
“Finally, let me turn to the fourth value I want to stress: political independence. In reforming our schools, in reinventing our social services, in area after area, we’ve been willing to touch the so-called ‘third rail’ issues that others have avoided. The reason, quite simply, is that the political independence of our Administration has allowed us to take on vested interests, and let the chips fall where they may.
“I’ve found that when you do this, the voters – even if they don’t agree with you on everything – will respect you, because they know that you’re making decisions based on the merits, not based on polls or partisanship or political calculus.
“A good example of how we’ve been independent – and one with global implications – concerns the largest single cause of preventable death worldwide: Tobacco. Over the past six years, New York City has been very pro-active against smoking – often in the face of stiff and vocal opposition.
“We’ve raised cigarette taxes, mounted aggressive public information campaigns, increased smoking cessation programs, and outlawed smoking in all public places, including restaurants and bars. And if you want a character-building experience, I suggest doing that, and then marching in a St. Patrick’s Day parade that goes past the city’s pubs. You’d be surprised how many one-fingered waves you get!
“But let me tell you, this is an area where political independence – a willingness to fight the vested interests – has really paid off. We’ve cut smoking among adult New Yorkers by 20% during the past six years and reduced teen smoking by 52%. That translates into a quarter-million fewer smokers, untold millions, short- and long-term, in saved dollars in health care costs, and even more importantly, saved lives.
“Now we need to write the same kind of success story worldwide. And to do that, your help is needed in supporting the city and national leaders who are willing to show political independence in the face of the powerful vested interests promoting tobacco use. As you may know, developing countries already account for 70% of cigarette consumption. And tobacco companies are stepping up their marketing in the developing world.
“As The Economist put it recently, ‘The tobacco industry is getting the world’s poor hooked before governments can respond.’ Unless we do respond, the result will be a public health calamity: One billion pre-mature deaths – from cancer, stroke, and heart disease – in this century, many of them in the cities where you work.
“In response, my foundation supported a recent World Health Organization study of tobacco habits and policies in 179 different countries. If we want countries to change their policies, we first had to know scope of the problem. That’s just the first step in what is going to be a long struggle, fought on many fronts. But as New York City has shown: This is a winnable fight – one that the world’s other cities and nations now must also join. Again, I ask you to join me in this effort.
“Globalization, innovation, accountable governance, independent leadership: Each of you in your work in cities around the world has the opportunity to foster these values. The 21st century will see an increasingly urban world – on every continent on our globe. Now it’s up to all of us to ensure that the residents of the world’s cities enjoy a safer, healthier, and more secure future.
“Every generation, in its own way, faces the challenge of enlarging the realm of human happiness and opening up new vistas of human possibility.
“When we talk about ‘building better cities’ in our world, that’s truly what’s at stake. We have the knowledge, we have the resources, and I believe we all have the will!
With an already dim fiscal picture turning darker, Mayor Michael R. Bloomberg on Thursday proposed a budget that would increase spending by 3.7 percent but cut money from every city department, from sanitation to schools.
The proposed $58.5 billion spending plan is a sharp departure from those of recent years, when unexpected surpluses fed by booms in the real estate and financial markets allowed the mayor to unveil ambitious new programs.
The mayor said the overall spending increase was driven by expenses he said were difficult to control, including Medicaid costs, health care and pensions for employees and debt service. To compensate for those costs and falling revenues, he said, the administration was trimming other spending by roughly 4.3 percent.
His plan calls for scaling back subsidies for public libraries, cultural programs, meals for the elderly, tutoring at the City University of New York and summer jobs for youth. The mayor could face a battle as the City Council focuses on those programs, many of which are dear to its members.
“We haven’t seen the effect of the cuts on the agencies,” said Councilman David I. Weprin, chairman of the Finance Committee. “We may be proposing alternative cuts, and we may be arguing for or against certain cuts.”
Mr. Bloomberg included a popular $400 property tax rebate for homeowners in his budget, but he warned that if the economy continued to sink or if the city did not receive enough state and federal aid, the final budget for the fiscal year beginning in July could include higher property taxes and more severe service cuts.
“If we try harder we can all find these kinds of savings without cutting back essential services or even most of the very desirable things that we do,” Mr. Bloomberg told commissioners and reporters at City Hall. “If we can’t get cooperation, if we can’t get help that we’re counting on, if we can’t get the things that we have been promised in the past,” he continued, taking aim at Gov. Eliot Spitzer, who is proposing a reduction in aid to the city, “then I don’t think that is possible.”
Should further cuts become necessary, Mr. Bloomberg said, he would fight hardest to retain the property tax rebate, saying that owners of one-, two- and three-family homes have not really benefited from the extraordinary surges in property values and have had to struggle to meet higher tax burdens.
Along with the proposed budget, Mr. Bloomberg presented a four-year financial plan that anticipates deficits of about $4.2 billion in the 2010 fiscal year, $5.6 billion in 2011 and $5.3 billion in 2012. Mr. Bloomberg’s charts — which featured more bad news than good, he noted with a wry smile — showed that in June the city anticipated that Wall Street would generate $16.8 billion in profits in 2007, but now expects just $2.8 billion.
Nonetheless, Mr. Bloomberg appeared unusually relaxed through the nearly 90-minute presentation, and sought to reassure New Yorkers that while difficult times were ahead, they were not yet dire. He said he thought the economy would continue to decline but had no way to truly know, and urged residents to enjoy themselves.
“If you live prudently and put some money away and work hard, you’re probably going to be O.K.,” he said at one point. “Don’t sit there and hunker down and, you know, try to live in a tent.”
Despite Mr. Bloomberg’s assurances, the proposed budget could lead to noticeable service reductions, especially at the Department of Education, which is set for a $324 million cut in the next fiscal year and is undergoing a $180 million reduction in the current fiscal year. Mr. Bloomberg, who won control of the school system in 2002, has staked much of his legacy on its improvement and has generally increased spending or allowed the department to avoid reductions, even in tight times.
Schools Chancellor Joel I. Klein said that most of the reductions would be passed down to individual schools, with an average of more than $100,000 coming out of each school’s budget, although the final figures could vary widely depending on size and demographics.
Principals will, he said, “have to tighten some programs,” like eliminating intensive tutoring on Saturdays or after-school activities.
“My theory is that they should have some discretion. Different schools may find that they have to cut back on a program or that they may have to make some adjustment with the staff.”
While the central administration will make some trims, like reducing costs when purchasing supplies, the brunt of the cuts would fall on the schools. The department will save $1 million by reducing the number of citywide standardized tests to 8, instead of 10 as originally planned, and cut $10 million by eliminating some teaching positions for English as a second language instruction. Mr. Klein defended the decisions, saying that the Education Department had cut $230 million from the central administration office in recent years.
The city also transferred some spending responsibilities, including paying for computer repairs, to individual schools.
Randi Weingarten, the president of the United Federation of Teachers, criticized Mr. Klein, saying he did not do enough to protect the education budget and had misplaced priorities.
“Instead of looking at all the test-driven materials or looking at the bus contract or looking at other kinds of things where there is fat in the system, the first thing they do is make the schools pay for it,” she said. “The chancellor should be the champion of the schools, not cut into the schools.”
Mr. Bloomberg’s proposal, which seeks to reduce overtime costs at a number of agencies, would also cut funds for 1,000 police officer positions that were authorized in richer times, officials said. The move is not likely to have much practical effect on the size of the force since the headcount at the department, which has been facing a recruiting crisis because of low starting salaries, has remained well below the maximum allowed.
The mayor and his aides portrayed many of the trims as savings realized from greater efficiency or shifting realities, like closing shelters because of a decline in the population of single homeless adults. Pressed on the cuts to the sanitation budget, for example, aides said that garbage truck routes would be consolidated and could not guarantee that residents would see as many pickups.
The research director at the Citizens Budget Commission, Charles Brecher, said he suspects Mr. Bloomberg will use the prospect of a property tax increase to pressure lawmakers to restore the expected money.
It's "a long-standing strategy that between January and April, a mayor tries to set up the terrible things that will happen in the financial plan if the Legislature doesn't provide some amount of aid," Mr. Brecher said. "His threat is that he's not going to cut things, but that he is going to have to re-impose this tax."...
When testifying on the governor's budget today before the Assembly Ways and Means Committee and the Senate Finance Committee, Mr. Bloomberg also is expected to focus on Mr. Spitzer's proposal to collect more than $1.1 billion through a series of fees and tax changes, which business leaders have warned could threaten the economy and dissuade businesses from locating in New York....
He has argued in the past that the city carries the state economy on its shoulders and should therefore receive more money from the state. Last week, he revisited this theme yet again, including a chart in his financial plan summary illustrating that the city pays $11.1 billion more in state taxes than it receives in funding.
"New York City needs to be treated fairly by New York State. We need to get back our fair share of New York State tax revenues," the financial plan summary states. "Our budget and financial plan includes the funding commitments that New York State made to the City last year, including the commitments to education capital and revenue sharing."
King went to Memphis to support African American garbage workers, who were on strike to protest unsafe conditions, abusive white supervisors, and low wages -- and to gain recognition for their union. Their picket signs relayed a simple but profound message: "I Am A Man." ...
The strike began over the mistreatment of 22 sewer workers who reported for work on January 31, 1968, and were sent home when it began raining. White employees were not sent home. When the rain stopped after an hour or so, they continued to work and were paid for the full day, while the black workers lost a day's pay. The next day, two sanitation workers, Echol Cole and Robert Walker, were crushed to death by a malfunctioning city garbage truck.
These two incidents epitomized the workers' long-standing grievances. Wages averaged about $1.70 per hour. Forty percent of the workers qualified for welfare to supplement their poverty-level salaries. They had almost no health care benefits, pensions, or vacations. They worked in filthy conditions, and lacked basic amenities like a place to eat and shower. They were required to haul leaky garbage tubs that spilled maggots and debris on them. White supervisors called them "boy" and arbitrarily sent them home without pay for minor infractions that they overlooked when white workers did the same thing. The workers asked Memphis Mayor Henry Loeb and the city council to improve their working conditions, but they refused to do so.
On February 12, 1,300 black sanitation workers walked off their jobs, demanding that the city recognize their union (the American Federation of State, County and Municipal Employees, AFSCME) and negotiate to resolve their grievances. They also demanded a pay increase to $2.35 an hour, overtime pay, and merit promotions without regard to race.
For the next several months, city officials refused to negotiate with the union. In private, Mayor Loeb reportedly told associates, "I'll never be known as the mayor who signed a contract with a Negro union."
