Minimum wage for central govt employees may be hiked
Union representatives meet Arun
Jaitley, Rajnath Singh and Suresh Prabhu, demanding increase in minimum
monthly pay beyond Rs18,000 suggested by Seventh Pay Commission
New Delhi: Under pressure from
the unions, the government has indicated that it may increase the
minimum monthly pay of central government employees beyond the Rs.18,000
suggested by the Seventh Pay Commission, seeking to defuse a strike
threat.
The assurance has divided several government unions on whether to go ahead with the indefinite strike starting 11 July.
Three cabinet ministers—finance
minister Arun Jaitley, home minister Rajnath Singh and railway minister
Suresh Prabhu—met representatives of several government staff unions
late on Thursday for almost two hours and assured them that their demand
would be looked into.
The unions have been demanding
Rs.26,000, higher than the Rs.18,000 approved by the cabinet on
Wednesday on the Seventh Pay Commission’s report. The government said it
was more than doubling minimum pay from Rs.7,000 after accepting the
recommendations of the commission, which would put an extra Rs.1.02
trillion in the hands of 10 million government employees and pensioners.
“Three top ministers called us
and we met at Rajnath Singh’s house for two hours till 11pm last night.
We have been assured that the minimum wage issue is going to be referred
to one of two committees that the government is setting up to rectify
any anomalies in the pay commission recommendations’ implementation,”
said Shiva Gopal Mishra, general secretary of the National Joint Council
of Action (NJCA), a confederation of several government staff unions.
The council claims a membership of 3.3 million, including workers of Indian Railways, the country’s largest employer.
Mishra said Jaitley accepted
their concern. “He said the government will try to rectify some of our
demands, including minimum wage,” the NJCA general secretary said.
Union leaders claimed that the
pay commission’s recommendation and the government’s announcement
raising minimum pay from Rs.7,000 to Rs.18,000 had glossed over the fine
print.
“Now, base pay plus dearness
allowance (DA) makes the minimum wage Rs.15,700. They have increased it
to Rs.18,000,” said K.K.N. Kutty, national president of the
Confederation of Central Government Employees and Workers.
“When you are doing away with DA
in the new system, the hike cannot be just Rs.2,000,” said C. Srikumar,
general secretary of the All India Defence Employees Federation, a
union of civilian workers in factories and establishments under the
ministry of defence.
Mishra said the home minister assured them that “their interaction with us has the blessings of PM Narendra Modi”.
“On minimum wage, we are for a negotiated settlement and it seems there is some consideration at the highest level,” he added.
An office-bearer at an
employees’ union said the government’s offer had posed a dilemma to
union leaders, noting that it wasn’t a written assurance, “without which
it will be tough to accept that the government is indeed serious in
reworking the minimum wage”.
The offer had ended up dividing
the unions on whether to proceed with the strike, this person said on
condition of anonymity. “And we could not reach a conclusion on Friday
on our next course of action,” he said, adding that the railway workers’
union was hesitant about going on strike.
Mishra, who is also the general secretary of All India Railwaymen’s Federation, sounded a conciliatory note.
“We are fighting for the welfare
of our own workers…a strike is an option if government does not listen
to us. There seems to be a political willingness to solve what we are
demanding and that’s what was indicated last night,” Mishra told
reporters in New Delhi.
On Friday, NJCA wrote to all
unions that “government has proposed to refer the issue of minimum wage
and fitment formula (for calculation of salary) to a committee for
reconsideration. The NJCA will await communication in this regard from
the government”.
It said that it will meet on 6 July again to decide on the proposed strike.
What is interesting is that
increasing the minimum pay will change the salary fitment calculations.
If the minimum wage is hiked from Rs.18,000 to even Rs.20,000, the
fitment rate will be higher than the 2.57 times approved by the
government based on the pay commission recommendations.
“If the 2.57 fitment formula is
tinkered with, then salary and pension in general for all segments of
employees will go up, putting further stress on the exchequer. So the
government has to walk a fine balance and a lot of homework is
required,” said a government official, who declined to be named.
The acceptance of the pay commission recommendations is a potential boost to the consumer economy.
A further hike could lift consumption further, but it will be tough on government finances, the official said.
Rating agency India Ratings and
Research Pvt. Ltd said the gross impact of pay hike on the economy is
likely to be Rs.94,775 crore.
“The central government will
receive income tax on this payout and collect excise duty on
consumption, after sharing the increase in income tax and excise duty
with states. Thus the net impact on the central government finances is
estimated to be Rs.80,641 crore,” said D.K. Pant, chief economist of
India Ratings and Research.
