7th Central Pay Commission (CPC): Issues and Expectations
Every ten years, the Central Government of India sets up a Central
Pay Commission (CPC) to revise the pay scales of its employees. Since
these pay scales are largely adopted by state governments as well, they
influence the income of millions of households.
During 2013, time seemed to be running out for the constitution of
the next Commission before the beginning of the election cycle. But on
September 25, 2013, a week before the election-related Code of Conduct
became effective, the government set up the Seventh Central Pay
Commission. This commission will review and revise the salary and
pensions of 50 lakh (5 million) or more Central Government employees.
Now that it is constituted, the Commission will most likely be able to
implement its recommendations by the scheduled date of January 1, 2016.
Duties of the Seventh Central Pay Commission
On Feb 28, 2014, the Cabinet approved the terms of reference of the
7th CPC. The CPC is expected to suggest a merger of 50% of DA (daily
allowance) with basic pay, which would increase the gross salary of
Central Government employees by around 30%. The Cabinet has approved an
additional 10% DA over the existing 90% admissible DA, effective January
1, 2014. This increase would be paid in cash after the disbursement of
March salary. The 7th CPC is required to submit its recommendation
within a year and a half of its date of constitution.
Major issues to be resolved
1.
Pay Parity between IAS & other government services:
Hundreds of letters are sent by IAS officers to the concerned
government officials apprehending that the seventh central pay
commission may try to restore parity between different government
services in terms of compensation and career progression. It is to be
seen how 7th CPC and government deals with this crucial issue.
2.
Pay parity with private sector: Central services
have demanded to every pay commission to create parity with the officers
of private sectors and make their salary structure comparable to later.
3.
Retirement age: There is no denial of the fact
that working efficiency of an employee is influenced by the increasing
age but experience often weighs heavily over the age factor. Even then
looking at attitude of present government impression is clear that pay
commission is signaled to reduce the retirement age of government
employees. Whatever circumstantial indications are available it shows
that either 33 years of service of 60 years of age (whichever is
minimum) is likely to be recommended. If media reports have ant
substance of truth, under performers may be asked to opt for voluntary
retirement after reaching the age of 55 years.
4.
Pay gaps between least & highest paid employees:
In 1947, gaps in salary between lowest and highest paid government
employee was in the 1:41 ratio that got reduced to 1:12 by subsequent
pay commissions. It has to be observed whether this gap is widened or
reduced by the 7th CPC.
5.
Continuing with grade pay system? It would be
interesting to note whether 7th CPC continue grade pay system or adopts
old pay scale system. As per reliable sources, grade pay system will not
longer exists in 7th CPC structure. A table is circulating in the media
predicting projected pay scales believed to be suggested by 7th CPC.
What are the hottest rumors?
1. Central Government is willing to merge 50% DA with basic pay with
effect from 1.1.2015 – All Government employees would be happy if it has
happened,
2. Age of Retirement will be determined based on completion of 33
Years of service or at the age of 58/60/62/65 Years (depending on
existing retirement age in various departments) whichever is earlier.
Members of the Seventh Central Pay Commission
Chairman – Ashok Kumar Mathur (Former Supreme Court Justice and Former Chairman, Armed Forces Tribunal)
Full time member – Vivek Rae (oil secretary)
Part time member – Rathin Roy (Director, NIPFP)
Secretary – Meena Agarwal (OSD, Department of Expenditure)
Latest update
- Union Cabinet chaired by PM on August 26, 2015 gave its approval for
extension to 7th CPC to submit its report by the end of December 2015.
- As per reports in media, 7th CPC is likely to maintain status quo on
the retirement age. However, some unconfirmed sources didn’t rule out
the possibility of a suggestion from Pay Commission to the government
that the earliest of either 33 years of service length or 60 years of
age may be considered as a criteria for superannuation of central
government employees.
- Recommendation for pay hike is likely to be low after merging the
existing basic pay and dearness allowances. Merging the both component
mean 155% rise and adding 25-35% extra makes it 1.8 to 1.9 times in
terms of basic to basic.
- Grade Pay is likely to be abolished by 7th CPC and gaps between pay
scales may widen and hence 7th CPC scale may some what follow the
earlier pay formats (as in 3rd, 4th or 5th CPC)
- Government may not risk any adverse effect of disclosures related to
pay recommendations on election prospects in upcoming Bihar elections.
Implementation Dates of Previous Pay Commission Recommendations
January 1, 1986 – 4th Pay Commission
January 1, 1996 – 5th Pay Commission
January 1, 2006 – 6th Pay Commission
The Pay Commission Process
Implementation of a Pay Commission’s recommendations always leaves
behind a few anomalies for the next commission to resolve. Making
recommendations for pay revision is a long process, involving discussion
with various organizations, submission of demands by representatives of
unions and associations, and evaluating the potential financial impact
of these demands on the national exchequer. Representatives of various
organizations are asked to make presentations. The Pay Commission
examines service conditions, pay, and perks given to employees.
All the earlier Commissions set up to revise the pay of Indian
Central Government employees—except the 6th CPC—took more than three
years to submit their report. The Sixth Pay Commission submitted its
report within just eight months. Nevertheless, such a quick turnaround
cannot be taken for granted for future Pay Commissions, since the timing
of report submission and the nature of the recommendations are
influenced by political and economic considerations.
Rationale for the Seventh Pay Commission
The constitution of the Seventh Pay Commission is justified for the reasons listed below.
- Daily Allowance (DA) has already exceeded 100% of basic pay, and it
cannot be merged with basic pay due to the recommendations of the 6th
CPC.
- Since the wages of some categories of non-government employees are
revised at intervals of less than ten years, wages should be revised
every five years for central government employees also.
- Prompt pay revision of Central Government employees will help reduce
the increasing disparities between Central Government employees, public
sector employees, bankers, and private sector employees.
How much increase in salary is expected after 7th CPC implementation
Other expected tasks for the 7th Pay Commission include resolving
anomalies created by the 6th CPC and addressing bonuses and problems
related to the new pension program. All sections of employees will get
an opportunity to present pay-related problems to the new Pay Commission
and request redress of their grievances.
A new demand gaining support is constitution of a National Pay Panel
that will make recommendations for all employees of the country. Since
most of the states have adopted for their own employees the pay
structure suggested by the 6th CPC for Central Government employees,
uniform recommendations would remove discrimination between state and
central employees. Recommending a uniform wage structure for each and
every employee of India would also reduce pay disparities between
private, public and autonomous organizations.
My poll indicates that 39% believe that Central Government employees
are likely to get a threefold raise in salary. This is consistent with
what was done in the past by earlier pay commissions. Given the existing
trend in DA increase, salary may increase 2.3 times by the
implementation date of the 7th CPC. Projected pay scales under this
assumption are shown below.
Projected Pay Scales (After Implementation of the 7th CPC)
A projection based on media report is reproduced below. However, a
fake report in the name of 7th CPC is also being circulated in the media
by some miscreants. 7th CPC has been granted extension by the Government of
India to submit it report by the end of December 2015. It would be clear
after the submission of report by 7th CPC what content it has submitted
to the ministry for acceptance. Further, each and every point in the
report will be examined by the cabinet and approved after considering
all the implications. Till then enjoy and go through the speculations
made by experts.
7th CPC as per some media reports has eliminated grade pay system and recommended pay scales similar to earlier pay commissions.
A better way to get rid of corruption in public life than
across-the-board increases would be to legalize a commission on services
by each and every employee. This would also help improve the
productivity of private sector employees. In some private or autonomous
banking institutions, for example, employees are paid a reasonable
percentage for accomplishments such as encouraging customers to open
more accounts.
Wage revision is expected for Central Government employees effective
January 1, 2016. The newly constituted Pay Commission will get two years
to review the existing wage structure and suggest a new one, to meet
the expectation of employees, and also to increase efficiency at work at
a pace with the growth in the economy.
The Seventh Pay Commission needs to introduce more parity into the
pay structure of various sectors. Employees in all departments have been
vested with more responsibilities, but their pay structure still
belongs to the British period. People serving in the police and armed
forces have very low salaries although their duties have become
enormously more challenging. Government should increase the compensation
to its officers for any service-related casualty. Police forces working
under adverse conditions and in remote areas must be paid high wages
and good benefits so that more people join these organizations.
The new pension system implemented based on the recommendations of
the 6th CPC needs to be revisited and reviewed by the 7th CPC, since the
adequacy of fund management depends on market forces and the
capabilities of fund managers. The 7th Pay Commission needs to take some
vigorous action, based on discussions with trade unions, to come out
with a more amicable solution for the new pension scheme.
These are some of the things people genuinely expect from the government, but time will tell how much people get from the CPC.
Source: Hubpages.com
