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Tuesday, March 18, 2014



  Central Government has announced the formation of Seventh Central Pay Commission. Recommendations of the Pay Commission are expected to be implemented from 1.1.2016, i.e. ten years after 1-1-2006 - the date from which Report of Sixth Pay Commission was implemented.

  While many Public Sector Enterprisesowned by Central Government revise the Pay of their employees once in five years, pay and allowances of Central Government employees are revised after 10 years.
In case of employees of MNCs and Private enterprises the pay revision happens at much shorter intervals say almost every year.

 This is one of the main reasons for large ever increasing Pay disparities in the country.

 Ten years is long period. Lot of changes have taken place all around. High inflation has eroded the real value of money. Whatever pay & Allowances were fixed after the Sixth Pay Commission had seriously eroded over the years due to fast changes happening around the world and Country. Changes in the Economic & Infrastructure sectors, Changes in policies of Government & its priorities have all added to the burden of the common man. 

Changes in the lifestyle of the society at large have changed every ones priorities and requirements. What used to be a luxury in the yesteryears, has become essential today. Changes in the pattern & requirement of Education, Housing & Health system in the country and changes in the diet and food requirements have all added to the financial needs of a common man. Need for attracting talent to Government employment in the Global scenario has vastly increased but this cannot be effectively done without offering 
attractive wages and careers.

All these aspect will have to be considered carefully by the Seventh Pay Commission while determining the 
wages of the Central Government employees, so as to give them a fair deal and do justice to them. 

Employees have become very restless and frustrated – both on account of erosion of wages due to 
inflation and refusal of the Govt. to merge the Dearness Allowance – which had crossed 50% mark in January 2011, and which crossed the 100% mark in January 2014. 

DA had all along been merged in Pay for all purposes every time it crossed the 50% mark since the third 
Pay Commission. It was the first time in 40 years when the same had not been merged in Pay. The only plea the Government had in this regard was that the Sixth Pay Commission had not recommended for the merger in this regard – whereas the earlier Pay Commissions had recommended for the same in their Reports. 

The main justification for merger of DA is on account of inadequate compensation against the inflation 
provided by DA, as many of the factors leading to inflation; do not get reflected in the Consumer Price Index (CPI). Many unwanted items are included which reduces the weightage of vital items in compilation of CPI – as they are not given due weightage while compiling the CPI (for Industrial Workers) – on which the DA is Based. 

Cost of living as per actual cost of prices has gone up by over 200% the DA we are getting is only 
100% from January, 2014.

 Fifth CPC In the Chapter on Dearness Allowance had recommended that “each time the CPI increases by 50% over the basic index used by the last Pay Commission it should be converted into Dearness 
Pay. Such DP should be counted for all purposes, including retirement benefits.” 

Sixth Pay Commission in Para 4.1.18 of its report, had erroneously contended that DA should not be merged 
on reaching 50% but an increase of 25% in Allowances be given – other than DA & HRA). Sixth CPCfurther contended that the Merger of DA on crossing 50% be discontinued on the ground that the Increments had been recommended to be on percentage basis 

These contentions of Sixth Pay Commission were not only inconsistent with the recommendations of the 
previous Pay Commissions; these were also against the established laws of economics on which the very concept of grant of DA and merger thereof after reaching a reasonable level were based – to avoid wage erosion and its distortion. 

Wages in Public undertakings were revised thrice in recent years i.e. from varied dates in 1997, 2002 and 
2007. The fourth revision thereof is due from 2012 and may soon be affected – as per ongoing negotiations thereon.. 

Wages in the Private Organised Sector and in the Corporate Sector (and MNCs) are much higher and are 
revised even more frequently. 

As against this the wages of Central Government employees were not only lower than PSUS as well as 
Private and Corporate but are revised only after 10 years interval – thus increasing the gap & the disparity every time. 

These vast disparities are causing much frustration and flight of talent to the Non-Government sectors, besides being volatile of the Constitution of India and law of Natural justice. 

There is thus an urgent need to revise the wages of the Central Govt. Employees and merger of DA in Pay 
for all purposes. The contention of the Govt. that it involves huge expenditure and that it cannot afford it, is totally wrong and untenable. The Centres wage bill is just 7.3 % of the revenue expenditure in the year 2011-12, as against 12.8 % in the year 1996-97, since when it has actually been declining – thus further justifying immediate revision of wages of the employees. 

IRTSA, therefore, will urge upon the 7th Pay Commission and the Government, as under: 

i) a) Immediate Merger of 50% of DA with pay w.e.f 1.1.2011; and 
   b) Merger of 100 % DA from 1-1-2014. 

ii) Interim Relief of at least 40% of the Pay/Pension + D.A be granted to all Central Government Employees & Pensioners w.e.f 01.01.2014 - pending finalization & implementation of recommendations of the Pay    Commission, to mitigate the sufferings of the employees and Pensioners. 

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