7th Pay Commission – Fitment Formula, Fixation of Pay on promotion and Date of effect of 7th CPC Pay, proposed by National Council, Staff Side, JCM in the Memorandum submitted to 7th CPC
Chapter – VIII Fitment Formula
The fitment formula suggested by all the earlier Pay Commissions was not reflective of the actual revision of wages. The employees who were on rolls on the date of implementation of the Commission’s recommendation comparatively received lesser benefit than the new entrants. Amongst the existing employees also, more benefit accrued to persons with lesser service period. This happened due to the rejection of the demand of the Staff Side to have point to point fixation.
8.2 The anomalous situation was addressed during the discussion the Staff Side had with the Group of Ministers in September 1997, over the implementation of the recommendations of the 5th CPC. In the place of 20% of the basic pay recommended by the 5th CPC as fitment formula the Staff Side could negotiate and settle it at 40%. The said agreement brought about near total satisfaction over the revision benefit amongst all sections of employees. The said 40% benefit brought about uniform multiplication factor too.
8.3. Taking these in to consideration, we suggest that the multiplication factor (26000/7000 = 3.7) may be applied uniformly in all the cases to arrive at the revised pay in the new scale of pay.
Fixation of Pay on promotion.
In the case of Promotion from one grade to another in the revised pay structure, the fixation is presently done as under:-
(a) One increment equal to 3% of the sum of the Pay in Pay Band and Grade Pay will be computed and rounded off to the multiple of 10. This will be added to the existing Pay in the Pay Band.
(b) However, the Pay so fixed must not be less than the minimum of the Pay Band to which he is promoted.
(c) The individual so promoted will get the Grade Pay assigned to the cadre to which he is promoted.
Exception to the general rule is, (a) When promotion takes from PB 4 to HAG scale of Rs.67000 – 79000, after adding one increment, pay in the Pay Band and existing Grade Pay will be added. To the figure so arrived at a sum of Rs.2000/- will be added. The pay so fixed is subject to a minimum of Rs.67000 and a maximum of Rs.79000
(b) The promotion from the Grade of Under Secretary/equivalent to the Grade of Deputy Secretary/Equivalent. The pay of the other will be fixed by granting an amount equal to two increments. i.e., 6 % of their Basic Pay. The figure so arrived at, a sum of Rs.1000 i.e., the difference between the Grade Pay of Under Secretary and Deputy Secretary (7600-6600) will be added .
9.2 We suggest that the financial benefit on promotion must not be an insignificant amount. In most of the Departments promotion is based upon a qualifying Exam or skill test. In the case of employees the promotions are made very many years after the stipulated residency period in the Feeder Cadre, due to the non availability of vacancy at the higher grades.. After undergoing the rigours of the exam/test or after prolonged period of service in the feeder cadre, if the financial benefit is pittance, it only brings about a sense of desperation and frustration. In most of the field formations, the promotions are accompanied by transfer from one place to another. The financial benefit he received on account of promotion often gets washed away in the reduced allowances like HRS, CCA etc. when posted to unclassified Cities, increased expenses involved in setting down at another location viz. Finding new accommodation, shifting, school admission for children etc.
9.3 We suggest that the benefit on promotion, therefore, should be:
“Two increments in the feeder cadre with a stipulation that the amount of benefit so arrived at must not be less than Rs. …………….
Chapter – X Date of effect.
Since the 5th CPC made its recommendation to have decennial wage revision, there had been no specified time limit fixed for effecting a reappraisal of the pay structure in Government Service. However, on an average, such revision has taken place once in 10-12 years.
10.2 India chose the IMF prescribed economic policies for faster growth in 1991. In the neo- liberal economic regime, old values, social ethos, standard of living underwent vast stride. Profit in any manner or at any cost became the slogan for the private enterprises to survive. In a competitive business world, the public sector could not remain an island of uprightness. In order to compete with the private sector, public sector, perhaps per force had to charter the course of reducing cost of production by casualization of their workforce. The Government had to change its recruitment policies, shed many of its functions, outsource, contractorise etc. to reduce its expenditure and consequently the fiscal and revenue deficits.
10.3 The point, we would like to mention, is that such changes, coming in quick succession brought about an urgency for the reappraisal of the principles of wage determination and other service conditions.
The new enterprises employing and administering sophisticated technological innovations did offer hefty pay packets to the few talented and skilled workforce, throwing the subtle wage structure in the society out of balance.
10.4 This apart, the Indian economy experienced a heavy thrust of inflation. The prices of articles, especially of food and other consumables registered enormous increases. The Government either failed or became ineffective to arrest the spiralling rise in prices. This hurt the fixed wage earners and devastated the middle class employees, who were to maintain a certain standard of living and status in the society. We may in this connection cite the observation of the 3rd CPC (of course made in a different context) and the 4th CPC to bring home the necessity of periodical wage revision.
“A dispirited public service can never be expected to function satisfactorily and to rise to the occasion, when a crisis occurs. It should not be forgotten, as pointedly referred to again by the Priesley Commission, that the process of deterioration arising from a sense of grievence on the part of the staff may be a slow one, particularly in a service with high traditions. By the time the tendency manifests itself, irrepairable damage may have been done. We may add that because of the cadre system, the full impact of deterioration in the calibre and the competence of the new recruits will be felt by the country after a time lag of 20-25 years, when they will be moving to the top and playing a vital role in the governance, of the country, as during the interval, their senior colleagues may be shouldering the burden. At that stage, restoration of administrative standards, may be well nigh impossible in the short time, as public servants in the top echelons take time to train and mature”.
The pay structure has therefore to be satisfactory all through and has to be formulated on a consideration of all the relevant factors.
“At the same time, it is necessary to revise the pay scales as and when necessary. The aim of such revision is not only to take note of changes that may have taken place in the relevant facts and circumstances bearing on pay scales, but also to rectify or fill any errors or omissions that may have occurred in the earlier pay determination. Where pay revision are announced at specified periods of time that gives hope to the employees who can look forward to a better deal on the next occasion. Periodic revision or review of pay scales thus serves to avoid conflict with the employer and enables the employees to prepare, with the reasonable hope that their grievances and claims would be gone into once again in a determined and honest manner. It generates the sense that there is hope for them in time to come and that it would be unnecessary to take the path of agitation or confrontation. The terms of reference of such review bodies are often decided in consultation with representatives of employees so that matters agitating their minds, or of particular interest to them, may fall within the purview of the review body and be adjudged in a satisfactory manner.”
10.6. In the organised private sector wages are on the basis on an agreement reached between the workers and employers through bilateral discussions. The tenure of their agreements is not for more than 3 years. It is not only to cater to the needs of workers that such short tenure is assigned to the agreements but the employer too, wanted the wage and other issues reviewed periodically.
10.7 Public sector managements are not free or autonomous enough to decide upon the wage and other service conditions of the worker. The Bureau of public enterprises and other Governmental agencies do make intervention on certain policy issues and ensure that no wide disparity exist in the matter among the public enterprises.
10.8 In most of the PSUs, the workers have asserted the need for a 5 year wage revision, despite the directive to the contrary of the Bureau of Public enterprises. Government and the management of PSUs had to succumb to this demand.
10.9 In January, 20102 the percentage increase over 306.33 all India Consumer Prie Index (12 monthly average) was 50% i.e., exactly after the 6th year, the wage revision of 5th CPC was given effect to. In January, 2011, the percentage increase over 115.76 all India Consumer Price Index (12 monthly average) crossed over 50% mark, i.e./, exactly after 5 years from the date on which the 6th CPC recommendations were implemented. The real erosion of wages would be much more than 50%(Pl. See our memorandum on Interim Relief .) As on 1.1.2011, the real value of erosion was about 174% if the retail prices of the commodities as on that date are taken into account. It was in realisation of this indisputable fact that the 5th CPC suggested for merger of DA with Pay to treat the DA component as pay for all purposes, so that the employee will have an immediate relief from the erosion in the value of wages.
10.10.Neither we could elicit a decision from the Government to merge DA with pay on 1.1.2011 due to the absence of a specific recommendation from the 6th CPC nor could we make them to agree to set up the 7th CPC. We had to resort to collective trade union action to impress upon the necessity of wage revision. The Government’s response, though, belated did avoid a confrontation, which was brewing and gathering momentum amongst the rank and file of the Central Government employees.
10.11 We, therefore, request the 7th CPC to make the following recommendations to the Government:
1.To merge DA and treat the same as pay for all purposes as and when the DA entitlement reaches 50%
2. To set up the next wage revision body or Pay Commission sufficiently before the expiry of five years.
3. To implement their recommendations with effect from 1.1.2014 especially in the background that the desirable tenure of the earlier Commission’s recommendations expired on 1.1.2011.