Seventh Pay Commission to submit report soon

MILLIONS of Central government employees will cheer this. The Seventh Pay Commission is ready with its recommendations on revising salaries for nearly 48 lakh central government employees and 55 lakh pensioners, and will soon submit report to the finance ministry.

Earlier in August, the government had extended Commission's term by another four months till December 31 to give recommendations.

"The Commission is ready with recommendations and the report will be submitted soon," an agency report...

quoting official sources said. The Commission, whose recommendations may also have a bearing on the salaries of the state government staff, was given additional time by the Union Cabinet just a day before its original 18-month term was coming to an end.

Headed by Justice AK Mathur, the Commission was appointed in February 2014 and its recommendations are scheduled to take effect from January 1, 2016.

The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its staff. As part of the exercise, the Commission holds discussions with various stakeholders, including PSUs, organisations, federations, groups representing civil employees as well as defence services.

The Sixth Pay Commission was implemented with effect from January 1, 2006, the fifth from January 1, 1996 and the fourth from January 1, 1986.

Set up by the UPA government in February 2014, the 7th Central Pay Commission was to make its recommendations within 18 months. Its term would have expired on August 27.

“In view of its volume of work and intensive stake-holders’ consultations, the 7th Central Pay Commission had made a request to the Government for a four month extension up to December 31, 2015,” a government statement had earlier stated.

The recommendations of the 7th Pay Commission—slated to come into effect from January 1, 2016, would impact around 48 lakh central government employees and 55 lakh pensioners.

The Commission has already completed discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as Defence services and is in the process of finalising its recommendations.

Headed by Ashok Kumar Mathur, a retired Supreme Court judge and retired chairman of Armed Forces Tribunal, the commission will revise the salary structure of five million central government employees, including those in defence and railways and about three million pensioners. The implementation of the Sixth Pay Commission increased salaries by 21 percent resulting in an additional annual burden of nearly Rs 18,000 crore for the Union government, besides a pay out of arrears of Rs 30,000 crore.

The commission may also raise hopes for tens of millions of salaried PSU employees.

The Sixth Pay Commission led to a 6 percentage point increase in dearness allowance for central government employees from 16 percent to 22 percent.

Under the Terms of Reference, the Commission had to take into account, among other factors, the prevailing pay structure and retirement benefits available under the CPSEs.

The Sixth Pay Commission made certain recommendations on pay scales and allowances keeping in view the concepts which are in existence in PSUs such as percentage based increments, introduction of performance related incentives, interest subsidy on loans, voluntary retirement schemes, among others.

The Fourth Pay Commission was similarly required under its terms of reference to take into account the pay structure under the PSUs. Although comparison with the public sector was not part of the terms of reference of the Fifth Pay Commission, they did collect information from various PSUs for the purpose of making a fair comparison and an assessment of the general climate of wage revisions in the country.

In the changing paradigm of a competitive environment, the Sixth Pay Commission observed that the issue of comparison with the public sector has necessarily to be examined as the PSUs needed to function in a competitive environment and have the commercial objective as the predominant objective. A comparison of salaries between the public sector and the Government may not be appropriate as it would not be a comparison between similarly placed entities.

The Sixth Pay Commission studied the mechanism by which the salaries of employees of public sector undertakings are determined and the conditions that govern them with the aim of examining if any comparison could be drawn.

The public enterprises are categorized in 4 schedules viz. A, B, C and D based on quantitative factors like investment, capital employed, net sales, profit before tax, number of employees, etc.; qualitative factors such as national importance, level of technology, prospects for expansion and diversification, etc. as well as on the strategic importance of the corporation. The pay scales of chief executives and full time functional directors in Public Sector Enterprises (PSEs) are determined as per the schedule of the concerned enterprise.