• Wednesday, Aug 17, 2022
  • Last Update : 04:24 pm

OP-ED: Implication of higher bracketed income amid the Covid-19 pandemic

  • Published at 10:50 pm September 29th, 2021

Higher brackets should be reviewed to be actually deserved by them in the lockdown periods

There remains huge inequality in salaries between senior officials, mid-level officials, junior officials, employees, workers and so on.

During the lockdown situation amid the Covid-19 pandemic, physical presence in corporate entities by top tier officials is rarely found.

Only employees and workers are working during the pandemic situation with life risk.

There are few corporate entities like banks and financial institutions declaring special incentives and adequate insurance coverage for duties during the periods under services of limited scale.

Surely such initiatives will grease the engine of the economy for outputs to some extent; something is better than nothing.

Inequality is well analyzed in the famous book ‘Capital in the Twenty-First Century’ by French economist Thomas Piketty.

Unexpected picture is found from the empirical analysis of Piketty.

Unearned income is presented as one of the factors for the inequality in the society.

Despite the perception, there are income inequalities in salaried persons from sector to sector, from hierarchy of designations.

What is the contribution by people within high income brackets is rarely analyzed by corporate entities.

The Covid-19 pandemic will find out the reality of the corporate entities regarding the contribution of top income earners working therein, even in the government sector.

With the development of technology, contributions by human labor became lower for production activities.

Non-technological eras were labor intensive.

Output of the production is valued in monetary units.

Price is nothing but summation of input costs like materials, labor, and overheads.

On consideration of margin payable to owners over production cost, output price is determined.

Of the unit price, salary and wages are one of the cost factors.

Non-technological production process contains a major portion of costs, estimated at 30% of product price as salary and wages.

But different studies show that it is around only 10% in case of outputs produced using technological supports.

Distribution is key

It is a matter of question how 10% of salary and wages are distributed among natural persons working in the corporate entities.

On simple statistical analysis, average salary and wages look fine.

High inequality is observed if standard deviation is calculated.

Different studies show that top tier and high officials comprising less than 10% of total employees, enjoy more than 90% of salary and wages of the entities.

This indicates inequality in the corporate entities resulting in poor quality of life encountered by the huge human resources.

This group works as the life line of the entities, but the benefits received by them are very subsistent.

The other part of the scenario is different, they earn a lot of the total outlay of the entities.

As a result, their standard of living is so glorious, unimaginative to the mass employees.

There is a wall between these two groups of people.

We are talking about the group being deprived of reasonable benefits. The situation is basically created without any justified grounds.

But how such inequality in pay structure is developed is rarely analyzed.

Benefits at the top

Covid-19 creates a situation wherein top tier officials of corporate entities are under so called working from home.

It is nothing but an eye service.

Hi-tech service output industrial enterprises like IT companies and telcos have such scope.

Little scope for financial and e-commerce services since frontline workers such as booths, agents, and delivery personnel are in need to run the services.

Hence, work from home is a fashion.

Even services like accounting and finance are rarely possible to be executed remotely.

So real pictures are observed of what top tier and high officials are providing for the entities during the lockdown period.

As usual, frontline workers are providing services by avoiding health risks during Covid-19 pandemic.

As noted earlier, they are in low income brackets and do not bother about viruses since they are looking for a better livelihood. 

Otherwise they need to face situations like "no work, marginal food."

But they are real heroes in producing outputs in all periods whether in normal or abnormal situations.

Entrepreneurs actually create jobs?

It is widely spoken that entrepreneurs create jobs for human beings. Is it really true?

The real truth, as an answer, behind job creation is profit.

Investment goes to sectors which generate high profits.

For example, the RMG sector can be cited.

It has been said that it employs around 4 million people.

Why the figure remains stranded for a long time is a question.

The truth behind the situation is that the bottom line of the sector is decreasing.

This results in non-expansion of business and so employment is standing at a stagnant position.

To retain the bottom line at a significant level, efforts are found to employ technology, not human employment.

Amid Covid-19 pandemic, contributions by top tiers and high officials of corporate entities are really assumed; field level employees are essential. Top tiers are none but policy prescribers, like economists. 

But income inequality among different parties needs to be addressed. Covid-19 has given the situation to think of it.

Higher brackets should be reviewed to be actually deserved by them in the lockdown periods during which operations are in true sense run by the subsistent income earners.

In reality, operations are on running stages with the support of workers, with higher-ups as supervisors.

The difference between these two groups in the point of earnings should be reasonable, without a gulf of inequality.

Situation teaches us reality.

We can learn a lot from the situation of crisis.

Covid-19 is also teaching us, inter alia, who are real heroes in economic operations.

It is an eye opening session if we realize.

This learning if applied in the proper way will surely reduce inequality in the society.

Corporate entities should review it for applications in their pay structure so as to reduce the gap and there should prevail a reasonable gap, say, between CEOs and office assistants.

The author works in the development sector and can be reached at [email protected]