Mohandas Pai criticizes stagnant wages for entry-level IT workers, highlighting a mere 15% increase since 2011 despite significant CEO compensation growth. He emphasizes the need for fair wages, especially for the bottom 60% of earners, advocating for higher minimum wages and a reevaluation of compensation policies to address the widening pay gap.
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Mohandas Pai, Chairman, Aarin Capital, says they were paying Rs 3,25,000 to a fresher annually when I left Infosys in 2011. Now they are paying Rs 3,50,000 or Rs 3,75,000. How is it justified that after 13 years, you are paying maybe 15% more? What was the CEO paid in 2011? What is the CEO paid now? It has to be fair. We do not want our businesses to become a mercenary organisation. There is nothing wrong in pursuing profit. but companies should be fair because they claim to be fair employers. They say our staff are our greatest assets. They say all those things. Please do it.
I was just talking to a panel on the kind of work hours that the Indian workforce is putting in vis-a-vis some other countries like the United States, the United Kingdom, Japan, and others. Dell CEO has said that there’s a point of diminishing returns to the hours worked in a day. Success isn't just about endless hours of work, but about maintaining a balanced, enjoyable approach to one's career. Is this really implementable in a country like India for instance?
Mohandas Pai: You must not look at work hours but look at productivity. For example, Chinese productivity is possibly two to three times that of India. So, when people are highly productive, what matters is the work that is done. If people are not productive on an average, are there pressures? Do they require training? If they lack work experience, they have to put in the effort. So, I think we just cannot take work done for a week or something like that. We have to do it, point number one.
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Point number two, working hard is an individual attribute. It means that individuals need to work hard to build their skills, to build up their knowledge base, so they become more and more valuable. They do not remain in the same place. If you want to build up a large quantum of skills in the shortest possible time, you have to work hard.
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Now, what Dell is saying is a motherhood statement. Every CEO will talk like that. Now, Dell will want to have very good communication, he wants to be seen as a very forward-looking guy and will talk about all the nice stuff. But you must ask the people in their floor, people in his company and look at data from the company, what kind of hard work that they do? Because Michael Dell's companies work on very low margins and you cannot make good profits on low margins. We cannot go by bland statements made by CEOs for comforting people.
What essentially you are stating is that there is a difference between what our employees expect and what is being delivered to them in terms of wages. You are saying that the company might not be walking the talk, but you raised the point about productivity being key. Companies have called back employees to the office after COVID. Are they actually interested in measuring productivity?
Mohandas Pai: It is difficult to measure work productivity in a service business. In a factory business, it is easier. In a service business, it is very difficult to measure work productivity, especially in software, because the gap between productivity of a highly skilled person and average person is very wide. But there have to be some measures and the measures have to be based on work.
Let me give you an example. About 60% of the billing in software companies is called time and material. Time and material means you bill for so many hours per day. Now, if you do not have a record to say that the person has worked for so many hours and you are billing for so many hours per day, you are raising an invoice for work that has not been performed. I do not think anybody will turn around and talk to you and tell you these details. So, that is a challenge. We should take this global statement made by a global CEO with a pinch of salt.
When we talk about work-life balance, that is one side of the problem, but largely this is also an economic issue and I will once again, refer to India's CEA V Anantha Nageswaran’s comments, wherein he stated that while companies' profits were at a 15-year high in March, but salaries really have not moved at that pace. So, when India Inc leaders eulogize long working hours, the reality is wages are not moving in sync. They are not able to keep up with the current inflation numbers.
Mohandas Pai: Let us not link it to hours and all that because that is contentious, but certainly people at the bottom of the pyramid have not seen an increase in their salaries for the last many years that the CEOs have seen. Look at an IT CEO's salary five years ago, and look at it now. You will find it has gone up 50-60%. The top 5% salaries have gone up 50-60%. Board compensation has gone up 20%, 30%, 40%. But people at the bottom 20%, their salaries may have gone up only 20-25%. Yes, on a relative basis, most companies are making more profits, but the percentage of wages to value-added has come down because of automation, and they are not paying more. They should pay more.
In fact, the Quest study, which Anantha Nageswaran quoted, is based on a large number of companies who take people on contract. For the job roles, they are taken on contract. And there, the wages have hardly gone up 1-2% over five years, because minimum wages have not gone up. So, we must raise minimum wages in this country in the service area, in the manufacturing area it is a very different thing, but we should automate more in the manufacturing area and we should pay for better skills and we should raise it because cost of living has gone up, all kinds of costs have gone up and people are really in pain.
There is nothing to stop companies from doing that because they are also making money. You look at the auto companies which have 60-70% of people on contract. When you have so many people on contract, they do not get paid well. The people who are not on contract get two to three times what is paid on contract because they have been there a long time. You go to airports and you see some of the staff at the counter, they are all on contract.