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Monday, February 17, 2014
Seventh Pay Commission: What PSU
employees can hope for?
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Soaring hopes for PSU staff?
WITH hardly few
months left for the
general elections,
the United
Progressive Alliance
(UPA) government
has recently
formally
constituted the
Seventh Central Pay Commission. To be headed by
Ashok Kumar Mathur, a retired Supreme Court judge
and retired chairman of Armed Forces Tribunal, the
commission will revise the salary structure of five
million central government employees, including
those in defence and railways and about three million
pensioners. While the constitution of the commission
promises significant increases in pay for government
employees during an election year, it could
significantly increase the future fiscal burden of the
central and state governments. The implementation
of the Sixth Pay Commission increased salaries by...
21 percent resulting in an additional annual burden of
nearly Rs 18,000 crore for the Union government,
besides a pay out of arrears of Rs 30,000 crore. The
next set of recommendations is likely to be
implemented from January 1, 2016. The
announcement also raises hopes for tens of millions of
salaried PSU employees. Here it is pertinent to have a
look at what the Sixth Pay Commission
recommended for the pay hike of the PSU employees.

The Sixth Pay Commission, headed by justice BN
Srikrishna, was constituted on 5 October 2006. It
submitted its report on 24 March 2008, but its
recommendations were implemented retrospectively
from 1 January 2006. The report led to a 6 percentage
points increase in dearness allowance for central
government employees from 16 percent to 22 percent.
Under the Terms of Reference, the Commission had
to take into account, among other factors, the
prevailing pay structure and retirement benefits
available under the CPSEs. The Fourth Pay
Commission was similarly required under its terms of
reference to take into account the pay structure under
the PSUs. Although comparison with the public sector
was not part of the terms of reference of the Fifth Pay
Commission, they did collect information from
various PSUs for the purpose of making a fair
comparison and an assessment of the general climate
of wage revisions in the country.
Both the Fourth and Fifth Pay Commissions found
that the public sector itself was not a homogenous
unit or group for comparison of emoluments. They
observed that there were several differences in terms
of total benefits and emoluments of employees in the
Central Government and PSUs and it was, therefore,
difficult to compare the emoluments of Central
Government employees and those in PSUs. Fourth
Pay Commission concluded that the pay structure of
Central government employees cannot be based on a
simple comparison of the pay scales of posts at the
lowest level in the Public Sector Undertakings. The
PSUs were created by Government for specified
purposes and had adopted their own pay structure.
The nature of work and conditions of service were
different.
The Fifth commission making similar observations in
regard to the heterogeneity in the pay scales across
the public sector, did not concede the principle of
parity between the Government and the comparison
with the public and private sector.
In the changing paradigm of a competitive
environment, the Sixth Pay Commission observed
that the issue of comparison with the public sector has
necessarily to be examined as the PSUs needed to
function in a competitive environment and have the
commercial objective as the predominant objective. A
comparison of salaries between the public sector and
the Government may not be appropriate as it would
not be a comparison between similarly placed entities.
The Sixth Pay Commission studied the mechanism by
which the salaries of employees of public sector
undertakings are determined and the conditions that
govern them with the aim of examining if any
comparison could be drawn.
The department of public enterprises (DPE) functions
as the nodal department on the policy related to wage
settlement of unionized employees, non-unionized
supervisors, executives and board members. The
public enterprises are categorized in 4 schedules viz.
A, B, C and D based on quantitative factors like
investment, capital employed, net sales, profit before
tax, number of employees, etc.; qualitative factors
such as national importance, level of technology,
prospects for expansion and diversification, etc. as
well as on the strategic importance of the corporation.
The pay scales of chief executives and full time
functional directors in Public Sector Enterprises
(PSEs) are determined as per the schedule of the
concerned enterprise.
The Commission observed that in a bid to woo more
efficient staff to the Group A posts and to technical
posts for which a demand exists in the market, the
Commission recommended a higher starting salary
for Group A posts. It said the Government should
have the flexibility to offer a market driven salary to
highly qualified scientific and technical personnel
whose skills are in demand in the private sector. The
higher package will, however, be accompanied with a
fixed term contract which could be altered based on
performance, it recommended.
The Commission also suggested regarding the
appointment to selected posts at higher levels on
contractual and tenurial basis where market driven
salaries could be paid in order to attract the best
possible expertise to the Government. Further, taking
into account the fact that a large portion of the salary
in the private sector comes from performance related
payments, the Commission has recommended
introduction of performance related incentives in the
Government. This is also expected to bridge the gap
vis--vis the private sector.
The Central Government had earlier said that in so
far as wages for CPSE workers are concerned no
budgetary support for the wage increase is to be
provided by the Government and resources for
meeting the increased obligations must be internally
generated and must come from improved
performance in terms of productivity and profitability
and not from the Government. The validity period of
wage settlement would be 10 years with 100 percent
DA neutralization w.e.f. 1.1.2007 and the revision
would be subject to the condition that there is no
increase in labour cost per physical unit of output
except in rare cases.
CPSEs which have incurred a loss during all the three
financial years preceding the proposed wage
negotiation have also been allowed to enter into
negotiations provided they give an estimate to their
ministry as to how resources would be generated by
them to meet the extra expenditure arising out of
implementation. In sick PSUs, no revision is to be
allowed until BIFR approves the revival plan for these
enterprises.
The Sixth Commission called for detailed information
on the package of benefits available in the PSUs in the
power and the petroleum sector, most of which are
profit making, for making a comparison. The
examination of inputs received has revealed that
while the pay scales of executives and non-unionized
supervisory staff are generally comparable across
Posted by yadav k at 9:00 AM
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Labels: Basic Pay, BIFR, DA, DPE, Pay Hike, Seventh
Pay Commission
4 comments:
1.
AnonymousFebruary 25, 2014 at 12:23 PM
While framing any scale structure, basic befits like ,
medical, food/DA shll be more or less equall for all
the categories... please
ReplyDelete
2.
AnonymousMarch 26, 2014 at 10:35 PM
all the genius, forgot the sick psu employees(indian
psu slaves),their not responsible for sick,govt
foolish policy corrupted politicians highly
educated vested interest bureaucrats is the only
reason.but they are all enjoying wage revision
benefits punishment for sick psu employees.still
some sick psu employees getting 1987 pay scale in
2014?mr.chidambaram did you aware about this?.
ReplyDelete
3.
AnonymousMay 3, 2014 at 12:02 AM
In sick PSUs, no revision is to be allowed until
BIFR approves the revival plan for these
enterprises.BRPSE recomended the revival but
chidamparam reject the proposal then ,,how they
get wage revision? highly educated most powerful
bureaucrats pl answer this,why wage hike for
you.pl think how to revive the sick psu.what is the
reason,then only you will be allowed for wage
revision,otherwise your wage revision is from our
sins.you want that kind of revision? what is your
part for reviving the sick psu? shameless officers.
(forgive me for my English).
ReplyDelete
4.
AnonymousJuly 16, 2014 at 11:13 PM
Recently SAIL management agreement done for
non-executive of SAIL more than Rs50,000/-
Basic Pay in a S-11 Grade Where as an executive of
E-1 grade Getting only Rs 20600/- which is very
shame full and harassment to SAIL executives. So
it is expected a comparative Pay Scale from
Seventh Central Pay Commission.
ReplyDelete
PSUs owing to the fact that salary revision is carried
out based on the recommendations of the Committee
set up by DPE and not by individual PSUs,
considerable variation in the pay scales of workers
across PSUs exists due to the practice of separate
wage negotiations by individual PSUs. Therefore, even
among PSUs, a comparison cannot be made, observed
the commission.
The Sixth Pay Commission made certain
recommendations on pay scales and allowances
keeping in view the concepts which are in existence in
PSUs such as percentage based increments,
introduction of performance related incentives,
interest subsidy on loans, voluntary retirement
schemes, etc.
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