Indian Railways Coolies

Who would have thought that within the space of just a few months NPR would broadcast two reports on how startlingly overqualified some lowly employees of Indian Railways happen to be?

In my previous blog post I had discussed an April 1, 2010 report on Morning Edition on Indian Railways ticket collectors who, in their recruitment exam, are asked questions such as "Who won the Australian Open Women's Singles Tennis title in 2002?" and "What's laughing gas made of?"

Now we have a report by Raymond Thibodeaux of Marketplace Morning Report that cites the case of an Indian Railways coolie (or porter) who has a master's degree in Sanskrit! Thibodeaux helpfully points out that coolies earn $300 a month, which is five times the national average, get free medical care, and enjoy job security that is rare in private sector jobs. Not surprisingly, Indian Railways receives 30 applications for every coolie job it advertizes, and among those applicants are people like our Sanskrit pundit.

Now, why would Indian Railways sweeten the coolies' compensation package to such an extent that there are 30 applicants for every coolie job?

One possibility is that Indian Railways has learned from bitter experience that in general 29 of every 30 applicants are not qualified to do a coolie's job and that consequently to get one qualified applicant (for one vacancy) thirty people have to be induced to apply.

But, seriously, how likely is this? The requirements that applicants must meet are pretty clear: applicants must pass "a medical exam, a police background check, and a test to show that they can carry nearly 90 pounds on their heads for the length of two football fields." Why waste time applying if you know exactly what's expected of you and that you'd never make it? No, it is almost certain that quite a few of those 30 applicants are qualified to be coolies. For argument's sake, let's assume that for every coolie job advertized, there are 30 applicants of whom 15 are qualified to do the job.

Indian Railways needs just one qualified applicant per vacancy. Why then is its compensation package so generous that there are so many—fifteen, by my assumption—qualified applicants per vacancy? If the compensation package is gradually reduced to what economists call the market-clearing level, Indian Railways will get the qualified coolies it needs and the Indian taxpayer (who subsidizes Indian Railways) will save a bundle.

So, to return to my question, what's stopping Indian Railways from cutting coolies' compensation packages to the market-clearing level when doing so would have no downside for the Railways and a potentially huge upside for the taxpayer? The answer is simple: India's public sector employees' unions.

I have written at length about the tactics used by these unions to rip off the nation—see here, here, and here. It is a pity that NPR's reporters notice the incongruities in the Indian public sector but are either unable or unwilling to shine a light on the roots of the problem.