Government employees belonging to the Leftist unions in Kerala have been on strike for the last 5 days. They are opposing the contributory pension scheme that the state govt has implemented for staff from April this year.
What the govt of Kerala is telling the employees is that they should contribute 10% of their basic salary and DA (dearness allowance) to the Pension Fund Regulatory and Development Authority. The govt will make an equal contribution. When they retire they be eligible to withdraw 60% of the amount in the Fund and will receive a monthly pension from the remaining amount.
Most of the states in India and the central govt offices have already implemented this scheme.
The govt of Kerala has certain valid arguments for implementing the scheme. The govt says that 80.61% of state’s revenue goes towards payment of salaries and pensions for govt employees. A meagre 19.39% is left for looking after the welfare of the 3.25 crore people of Kerala. This is not a balanced distribution of the revenue.
The employees argue that the Pension Fund is investing the money in the share market, mutual funds and bonds issued by banks. The share market does not and cannot guarantee any fixed returns. Will there be any worthwhile amount given as pension when the employees retire? Gauging by the returns currently yielded by the equity-based schemes, there won’t be.
The employees’ anxiety is genuine. The govt’s arguments are valid too.
One wonders whether we cannot have any better investment schemes than the unreliable stock market. Why should the governments capitulate to the stock market and the traders?
Recently the Nobel laureate-economist, Joseph Stiglitz, showed that the top 1% of Americans possess 25% of the country’s income and one-third of its wealth. 90% of the gains of growth go the top 1%. The plight of most Americans worsened in the last several years. Who are these 1% people? They are the ‘monopolists’, people in the finance sector, and those who earn corporate revenues.
There is growing unemployment, inequality and frustration in America, thanks to its economic policies. Why should we too follow those policies? Don’t we have other options?
Professor Robert Wade, who shared the platform with Stiglitz, accused America of promoting plutonomy. Plutonomy means economic growth that is powered and consumed by the wealthiest upper class of the society. In such a system, the government is quite powerless. Power shifts from government to the business people.
Professor Ravi Kanbur, another speaker, cited examples of countries which did not follow the American policies to show that there was much less inequality in those countries.
I wonder why our government cannot redeem our economy from the traders.
Our Prime Minister has promised us a bleaker future. He has assured us that the prices of many things including diesel will rise soon. Subsidies will be gradually removed.
It is the end of the welfare government in our country, in short.
Private employers will be free to cut wages and allowances as they are doing already.
Who will benefit? We know that.