7th Pay Commission – Tangled with Issues & Expectations – 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 government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees. As part of the exercise, the Commission holds discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as Defence services.
The 7th Pay Commission, whose recommendations may also have a bearing on the salaries of the state government staff, was given more time by the Union Cabinet just a day before its original 18-month term was to end. Headed by Justice AK Mathur, the Commission was appointed by the previous UPA government in February 2014.
The 7th 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.
However, it seems the 7th Pay Commission is riddled with more issues than any previous CPC’s. We have lined it for you :
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 also likely to be a provision of retiring under-performing employees by the age of 55 or 30 years of service, whichever is more. Under-performers are likely to be retired by 55 or 30 years of service, according to the Seventh Pay Commission report to be submitted soon.
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 – A pay grade is a unit in systems of monetary compensation for employment. It is commonly used in public service, both civil and military, but also for companies of the private sector. Pay grades facilitate the employment process by providing a fixed framework of salary ranges, as opposed to a free negotiation. India adopted it from America.
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.
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.
The constitution of the Seventh Pay Commission was for the reasons given 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.
Other important 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.
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.
There is huge expectation from the 7th Pay Commission than ever before, how its going to live with it? Only time will tell.