7th pay commission is going to submit its report on 20th November 2015 and 15 % hike is recommended

 

Report from news circle says that 7th pay commission is going to submit its report on 20th November 2015 and 15% hike is recommended

 

After submission, it is believed that the outcome of 7th cpc recommendation will be unexpected and disappointment for bapus as Central Government deliberately influenced the Pay commission to be cautious about upward revision of pay and allowances of govt servants.

When the commission itself was ready to submit the report in stipulated time initially, the Central government gave four months extension upto December 2015.

 

The reason cited by Federation leaders for the extension was ‘ NDA government didn’t want to put itself in a mess before Bihar Election, because the Recommendation will not fulfil the expectation of Govt servants. The NDA government felt that disappointed central government employees may protest over 7th pay commission recommendation if it does not meet their expectation which , it felt, may reflect in Election Results. So the Central Government decided to postpone the date of submission of the report after the Bihar election.

 

But unexpectedly the NDA has failed to yield fruitful results in Bihar election. Now opposite parties found the reason to be united against the NDA Government, since the election result gave them faith and beleif to over power the NDA in coming elections.’

 

Further they added, “The winter session of Parliament going to start from 26 November 2015, opposite parties waiting to stall the proceedings of Parliament based on handful of sensitive issues which will be a bitter experience for NDA government.

 

So submission of 7th pay commission report before the winter session of parliament may help the govt to divert the attention of media and public from the sensitive issues”.

 

The Pay Commission, if it followed the methods adopted by previous pay commissions to compute the increase to be recommended for revision of pay and allowances of government servants, minimum 40% increase can be recommended.

 

But According to the Medium-Term Expenditure Framework Statement tabled by Finance Minister Arun Jaitley in Parliament said

So there are two possibilities for calculating Fitment Formula

 

1. As per the Finance Minister Statment the increase will be 15 %

2. All the Fedrartion demanded for 40 to 60 % hike, but minimum 30 % increase is expected.

 

Accordingly The Fitment formula for the above two estimates are worked out below

 

Present DA = 119%

Expected DA from from January 2016 =6%

Total Da =125 %

 

DA has to be neutralised to arrive Revised Pay from 1.1.2016, if so Multiplication factor will be 2.25

The Fitment formula = 2.25 + (2.25×30/100)  = 2.92

Minimum Basic will be Rs.7000 x 2.92 = Rs.20440

The Fitment formula = 2.25 + (2.25×15/100)   = 2.58

Minimum Basic will be Rs.7000 X 2.58 = Rs.18060

 

Minimum Pay to be recommended according to the above estimates by 7th Pay commission will be either Rs.20000 or Rs.18000

 

How ever both of the above figures will not satisfy the central government employees since the increase is not going to match their expectation. We have to wait to know the exact increase recommended by 7th pay commission till the date of the report is made public.

After taking in to account the expected DA of 125% from January 2016,  esimated 7th Pay CommissionPay Scales, 7th CPC pay and 7CPC Grade Pay as follows:

Meanwhile, we have also made a comparison of 7th Pay Commission Pay estimated by GConnect by adopting 6th CPC methods and 7CPC Pay proposed by National Council, Staff Side JCM and Confederation of Central Government Employees and Workers.

In this comparison, we have arrived at the Net increase in pay out of 7CPC Pay for employees in each grade pay which is calculated on the basis of present 6CPC pay along with DA as on January 2016 (125%).

This increase in Percentage has been calculated for 7th Pay Commission Pay estimated by GConnect and also for 7th CPC Pay proposed by JCM Seperately.

The first pay commission was constituted in 1946, while its submitted its report on May, 1947 to the interim government of India. ‘Living wage’ — the guiding principle for the first Pay Commission — is long past.

 

‘Now is Seventh Pay Commission time’, which is also to take in to account living cost of central government employees cost of their appraisal.

 

The cost of living measures the annual cost of necessities for one adult to live a secure, yet modest, lifestyle by estimating the costs of housing, food, transportation, health care, other necessities, and taxes.

Every government employee likely has a six-member family including his parents. So, Seventh Pay Commission is likely to increase salaries and allowances to minimise the impact on the cost of living for 50 lakh central government employees and 56 lakh pensioners including dependents.

 

Inflation pushes living cost, inflation, is an economic concept. The effect of inflation is the prices of everything going up year by year. A central government employee got salary Rs 3000 in 1987 under Sixth pay commission, now he gets Rs 80,000 with two promotion, this is called inflation, the price of everything goes up. When the price goes up, the salaries go up.

 

Every successive Pay Commission has roughly tripled pay. This means that simply by hiking up living cost for 10 years, a government employee would have tripled his pay.

 

The first pay commission was recommended Rs 55 salary to the lowest earning employee, second Rs 80, third Rs 185, fourth Rs 750, fifth Rs 2550 and sixth Rs 6660.

 

Accordingly, the Seventh Pay Commission is likely to propose minimum basic salary Rs 20,000 of central government employees, sources in the pay panel said.

 

The main reason behind the proposal of Seventh Pay Commission is to hike highest pay since 1947 on the account of Dearness Allowance (DA). The central government employees will get Dearness Allowance likely 125 percent at the time implementation of Seventh pay Commission. They never got such type of Dearness Allowance hike before implementation of any Pay Commission.

 

Dearness Allowance always merges with salaries and allowances under every pay commission’s proposal.

“The Seventh Pay Commission is ready with recommendations and the report will be submitted soon,” according to sources.

 

Headed by Justice Ashok Kumar Mathur, the Seventh Pay 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 employees and often states also implement the panel’s recommendations after some modifications. The first pay commission was constituted in 1946, second in 1957, third in 1970, fourth in 1983, fifth in 1994, sixth in 2006 and seventh in 2014.

 

As part of the exercise, the Seventh Pay Commission holds discussions with various stakeholders, including organisations, federations, groups representing civil employees as well as defence services.

 

Meena Agarwal is the secretary of the Commission. Other members are Vivek Rae, a retired IAS officer of 1978 batch and Rathin Roy, an economist.

 

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.

           There are number of unwanted articles on minimum wage, fitment formula and wage hike on many websites which are not true and create confusion among the Central Government Employees. This type of the articles also give wrong impressions and give wrong signals to the Government, these articles are written without having basic knowledge of the price rise and minimum wage calculation.

The minimum wage calculation is given below.  Hence it is requested to go through the below calculation of minimum wages, as the 7th CPC has indicated the use of using Dr. Aykroyd formula and 15th ILO norms for calculation of minimum wages. The rates are taken from Government shops (retail prices are 10% more than Government prices). The rates to be taken up by the 7th CPC may vary only marginally.

We should actually wait for the 7th CPC to give its report and then we should react and staff side JCM shall take necessary steps in this regard. Let us stop all such unwanted gossips of minimum wage, fitment formula and wage hike. The model minimum wage calculated using Dr. Aykroyd formula and 15th ILO norms as on 1st July 2015 is given below.

Item	Per Month 3 units in Kgs/ mt	Average Rate	Amount
Rice  (fine) & Wheat atta	42.75	40	1710
Dal	7.2	140	1008
Raw Vegetables	9	41	369
Green Vegetables	11.25	45	507
Other Vegetables	6.75	55	372
Fruits	10.8	75	810
Milk Dairy	18	33	594
Sugar	5	39.5	198
Edible Oil	3.6	114	410
Fish	2.5	410	1025
Meat Mutton	5	450	2250
Egg	90	5	450
Detergents*	1	161.58	162
Clothes	5.5	250	1375
Total			11241
Miscellaneous @ 20%			2248.2
Total			13489
Additional @ 25%			3372.3
Total			16861.5
Add 10% housing			1686
Minimum pay for unskilled worker in the erstwhile Group “D”			18547.5
Add 25% for Group “C” ( as proposed by 6th CPC )			4636.875
Total			23184.375
Add 6% more prices from 1st July  2015 to 1st Jan 2016			1391.04
Total amount			Rs 24575/-
Minimum pay for skilled worker in Group “C”			Say  Rs 25,000/-

Fitment formula = Rs 25000/7000 = 3.5

The main goal is to educate the Central Government Employees and prepare for the struggle path in case the  important demands expected of the 7th CPC are not met.

A) Minimum wage of Rs 25,000/- as per Government prices. 
B) Fitment formula of 3.5
C) Wage hike of more than 60%.
D) Proper pay scales with proper increment rate.
E)  Proper promotion policy and proper allowances.
F) Wage revision from 1/1/2014.

DA as likely on 1st Jan 2016 is likely at 125%.

After 7th CPC implementation it will DA will be zero %

Existing Basic Minimum wage is Rs 7000/- as on 1/1/06

Add 125% DA as on 1/1/2016 =Rs 8750/-

Total existing Minimum Wage as on 1/1/2016 is Rs 15750/-

If the Minimum wage is fixed at Rs 25,000/-

Net Increase shall be Rs 9250/-

Net Increase should be 60%.

Source: http://karnatakacoc.blogspot.in/

Honourable Finance Minister Shri.Arun Jaitely had spoken about the possible impact of 7th CPC recommendations in Parliament.

The Speech is critically reviewed by Comrade Elangovan of DREU.

1.     The Medium Term Expenditure Framework statement has not yet been uploaded in Finance Ministry’s website.However I have taken the figures provided by print media including The Hindu.As per their statement the expenditure on salaries will rise by 9.56% in the fiscal 2015-16 as a result of 7th CPC implementation over the normal estimated expenditure in the 2015-16 budget to Rs.100619 crores. This means that the expenditure projected was Rs.91,839cr which if increased by 9.56% becomes Rs.100619 crores.

2.     While going through the earlier framework statements I have come to the conclusion that the ‘salaries’ shown is pay with normal increments plus DA projected.

3.     As per the estimated strength and provision there of statement laid as part of finance budget,the normal projection as PAY was Rs.60731 cr and so DA is Rs 31,108 as deducted from Rs 91 839 cr. The budget document does not give the DA expenditure separately. It gives the total expenditure on all allowances. I have therefore arrived at the figure based on calculations. However I have sought the expenditure on DA, HRA, and Transport Allowance separately through RTI.

4.     The increase proposed is Rs.100619 cr from Rs.91,839cr  which means that there will be an increase of Rs.8780 cr. There won’t be any DA after 1-1-2016 up to 31-3-2016 in the fiscal 2015-16. Therefore the whole increase is on basic pay in this fiscal.

5.     As we have already seen that the basic pay is Rs.60731 cr. the increase of Rs.8780 cr. is over this Rs.60731.This increase is 14.45% only.The expenditure projected for 2016-17 is Rs.1,12,000cr which is Rs.11,400 more over 2015-16 which works out to 11.32%. This is due to Increment, DA,HRA, TRA etc.The projection for 2017-18 is 1,16,000 cr.

6.     If 40%  of Basic Pay is to be given,the increase of expenditure in the fiscal 2015-16  must  be Rs. 24000 cr as against the Rs. 8780 cr. The demand of JCM Staff side is that there must be an increase of 371% of basic pay as on 1-1-2016. With the 119% DA we would be drawing 219% already. The real increase demanded is 152% of Basic Pay.So not the 152% or 40% of 5th and 6th CPC is intended to be given to us. Only around 15% is going to be given.As The Terms Of Reference of 7TH CPC directs them to recommend only what is‘FEASIBLE AND DESIRABLE’ to the Government.Now the Government In Parliament states only 15% is FEASIBLE AND DESIRABLE. ARE WE TO ACCEPT IT.? Some PSUs got 15%. But that is for 5 years. But for Central Government Employees it is for Ten Years.Are We To Accept?

7.     Pension expenditure for civilian pensioners was estimated to be Rs.27,145cr and defence pension Rs.54,500 cr. The total is Rs.81645 cr. This is expected to go up to Rs.88521 cr, which is an increase of Rs.6876 cr.As there will be no Dearness Relief for the fiscal 2015-16 the increase is to be accounted only to Basic Pension.

8.     I have sought the expenditure break up for dearness relief under RTI. However the rough calculation shows a near increase of same 15% in Pension.

9.     The impact of 6th CPC on expenditure as per estimated strength of establishment and provision there of in respect of Central Government civilian employees was as follows:

ARREARS Rs 26084 cr.  For three  years mostly on Pay and DA regular PAY Increase per annum:   Rs 8685 cr.  These are actual figures. The 219% of Rs. 8685 cris  Rs.19000 cr.  EVEN THIS IS NOT GIVEN.

10.We must issue a warning to the government afresh demanding acceptance of our demand.I recall my earlier note where in I had quoted BibekDebroy’s report that the 7th CPC will not be that destabilising to the Government as that of 6th CPC. GOVERNMENT PROVES THAT.

Pay Commissions, which are regularly constituted to review salaries of Central government employees, give a fillip to the Indian economy, according to analysts.

The sixth Pay Commission partly offset the after-effects of the 2008 Lehman crisis on India because of the 35% increase recommended.

The implementation of the hike boosted two-wheeler and car sales and increased demand in the cement sector, according to global brokerage firm Bank of America Merrill Lynch.

 

Pay packages of government employees rose by an average of 35% as per the recommendations of 6th Pay Commission. They also received arrears of more than 30 months due to delay in the implementation.

 

“The arrears resulted in robust demand for consumer discretionary products that resulted in sustained stock performance over 3-5 years,” Jai Shankar, chief India economist of Religare, told NDTV Profit.

 

Due to this co-relation between Pay Commissions and economic growth, many analysts are eagerly awaiting the 7th Pay Commission report.

 

The 7th Pay Commission was appointed in February last year by the outgoing Congress-led UPA government, is likely to submit its recommendations by August-end or latest by October. The recommendations are likely to be implemented by the Central government next year.

 

About 50 lakh central government employees (including 15 lakh defence personnel) and more than one crore state and local government employees will gain from the recommendations to be made by 7th Pay Commission, according to Religare.

Besides, it will also result in an upward revision of pension for about 30 lakh retired Central government employees.

While there is no consensus on the amount of salary hike likely to be recommended by the 7th Pay Commission, analyst expects it to be in the range of 15 to 40%.

 

While Bank of America estimates the salary raise to be at 15%, Religare puts it at 28 to 30%. Credit Suisse expects a salary hike of 40%.

 

Economists see the 7th Pay Commission as improving the economic activity in the country by increasing consumption.

 

“The most important factor is economic activity itself which is gaining pace and, together with greater employment generation and policy reform, the 7th Pay Commission salary hike may help India enter a larger virtuous cycle,” said Religare.

 

“A 15 per cent salary increase would push up the central government’s salary bill by Rs 25,000 crore (or $4 billion), which is 0.2 per cent of India’s GDP. This will help in a consumption-driven recovery in the domestic economy,” said Indranil Sen Gupta of Bank of America Merrill Lynch.

2016 is a year expected to bring unbound happiness to the Central Government Employees. This year will end a long wait of 10 years, because the recommendations of the Pay Commission will be implemented in January 2016.

The Pay commission was established during the Manmohan Singh Government in February 2014. The deadline for the Pay commission was set to be 15 months. This leads to an expectation for the release of the Pay Commission report by September 2015. If the Memorandum submitted by the Various Employee Organisations is considered, the Pay Commission should provision recommendation for a four-fold increase in the current pay. During its tenure, the Pay Commission will travel to various cities, in addition to meeting the staff of various Employee Organisations. Here it is essential to note that during the sixth pay commission it was recommended to increase the pay of the Central Government Employees three-fold of their current pay.

The Pay of the Central Government Employees are compared with the Public sector employees such as BHEL, ONGC, etc and also with the Private sector employees. The minimum pay scale of the International Labor Union (ILO) is also considered as a norm. Further, the price of the various daily utility objects is taken into consideration. In the sixth pay commission the Inflation rate as on 01.01.2006 was also considered before putting up recommendations for the fresh Pay scales.

If we talk about the sixth pay commission the ratio of the minimum and maximum Pay was worked around as 1:12 and the minimum pay was decided to be Rs 7100. If in Rs 7100 we include House Rent Allowance, Transport Allowance, Education Allowance etc the figure increases up to Rs 10000.

This time the Dearness Allowance has crossed the figure of 100 percent, and according the Indian Labor Ministry the minimum pay should be Rs 15000 per month. If the inflation and minimum pay are considered, on today’s date the minimum pay should be increased from Rs 7100 to Rs 30000. If in this we include House Rent Allowance, Transport Allowance, Education Allowance etc the figure increases up to Rs 45000.

Thus the Pay of the Central Government Employees is expected to have a four-fold rise. The Central Government Employees are impatiently waiting for 2016, and we are also waiting to see how much do the Pay Commission stand up to the Expectations of the Central Government Employees.