Article: 7th pay commission recommendations: A bone of contention

Compensation & Benefits

7th pay commission recommendations: A bone of contention

The uncertainty regarding Minimum Basic Pay seems to be far from over. We take a look at how the situation reached an impasse
7th pay commission recommendations: A bone of contention

The recommendations of the Seventh Central Pay Commission have been at the eye storm ever since they were made public over two years ago. They have managed to ruffle feathers across a wide variety of stakeholders, and the deadlock regarding minimum basic pay is yet to be resolved. Undoubtedly, the commissions, set up every ten years, have an astronomical task cut out for them and their recommendations might not be able to please every last government employee. But if the intensity of resistance to the recommendations of the last two commissions is anything to go by, it might be time to overhaul the complex process of revising wages of government employees. Let’s take a look at a pressing issue for the government and its employees.

Central Pay Commissions

Before we get on to comprehend the present situation, let’s take stock of concept of Pay Commissions. The procedure goes something like this: Every decade, the government appoints a commission, usually consisting of representatives from diverse fields, to decide the new set of remunerations for government employees. The commission has a time period of eighteen months to submit their report, which consists of a new salary matrix, adjusted for inflation and also recommends a suitable increase in minimum basic pay, dearness allowances, House Rent Allowance (HRA) etc. The recommendations are then mulled upon by the government, and accepted, in their entirety or partially. State governments usually follow suit. 

This time around, the 7th Central Pay Commission (7th CPC), headed by Ashok Kumar Mathur, a retired Supreme Court Judge, submitted its report in November 2015, and had reached a figure of 2.57 as the ‘fitment factor’, and in effect suggested increasing the minimum basic pay from Rs. 7,000 to Rs. 18,000. It also recommended that of a total of 196 allowances, 52 be abolished and 36 be abolished as separate identities by merging them in other allowances. In June 2016, the Cabinet approved implementation of the recommendations over pay and pension with effect from 1st January 2016 but held its decision regarding allowances. Furthermore, in June 2016, the Ashok Lavasa Committee for Allowances was constituted to review the recommendations of the commission. In April 2017, the report was submitted to the government and released to the public in June 2017. The approvals for modifications and recommendations pertaining to increase in allowances were approved subsequently in May and June 2017. The Ministry of Finance notified the allowances under the 7th CPC with 34 modifications in July 2017, which were implemented from that month itself.

The Bone of Contention: Minimum Basic Pay

These numbers have been at the core of the debate. The employees feel that the fitment factor calculated by the 7th CPC is too low, and want it to be raised to 3.68, which would, in effect, raise the minimum basic pay to Rs. 26,000. The government is opposed to the idea, as the revision of wages is already proving to be burdensome on the exchequer. Furthermore, there were also protests on the date of implementation, as some states like Rajasthan chose to implement the new salary structures from January 1, 2017, as opposed to 2016 recommended by the commission. 

The National Anomaly Committee (NAC) was set up by Arun Jaitley in September 2016, to resolve anomalies in the implementation of the recommendations of the commission. However, owing to elections in Gujarat and Himachal Pradesh, the functioning of NAC has been stunted. There are various reports of the committee announcing its decision on the matter within the coming weeks, and the implementation of the same from the next financial year. After contradictory reports emerged regarding whether the committee will actually go through with the decision to increase the minimum base pay to Rs. 21,000 pm, the government clarified in October that since the demand for minimum pay and adjustment of fitment formula beyond the recommendation of the 7th CPC are not considered an anomaly, they cannot come under the purview of the NAC. 

The government then sought to pacify concerns of the nearly five million central government employees and a greater number of pensioners, and floated the idea to form another high-level committee to look into the pay structure; and now, the government is considering a proposal to raise the salary of all central government employees up to pay matrix level 5, beyond the 7th Pay Commission’s recommendation”. 

Trouble with Armed Forces 

The Pay Commissions have a record of evoking sharp reactions from the armed forces with their recommendations. The issue of representation of armed forces in the commissions has long plagued their functioning, peaking after the implementation of the 6th Central Pay Commission. The recommendations of the 7th CPC regarding the armed forces were jointly called out for their ‘several glaring inaccuracies and anomalies’ by the Chiefs of Army, Airforce, and navy in a memorandum to then Defence Minister Manohar Parrikar in December 2015. Despite intense consultations, there was no consensus on the issue, and eventually, in September 2016, the three chiefs decide to not implement the recommendations until the anomalies are addressed. The issue saw a heated debate and discussion among various sectors of the government and armed forces and made news throughout 2016 and first half of 2017. After revising the pay scale, and rectifying the raised anomalies in the field of pension and disability allowances, the government finally notified the implementation in May 2017.

If the confusion regarding the implementation of the 7th CPC recommendations were not enough, reports suggesting that the government was mulling over doing away with the very concept of pay commissions have started doing rounds. This was also suggested by the 7th CPC Chairman Justice Mathur, who favored a yearly increase in accordance with the current data and price index. The reports stated that instead of a decennial commission, a new system and formula for increasing the wages would be implemented, one of which was adjusting salaries and pensions when the Dearness Allowance crosses 50 percent. However, in January the government clarified in a Lok Sabha Q&A session that it was not considering any such proposition but the ambiguous wording of the answer has added fuel to the fire. As of yet, there is no clarity whether the minimum base pay will be increased, and when the potential hike will come into effect from. States of Bihar, Maharashtra, Madhya Pradesh, Uttarakhand, Uttar Pradesh, Haryana, Tamil Nadu, Gujarat, Rajasthan, Odisha and more recently Jammu and Kashmir are all at various stages of implementation of the recommendations of the 7th CPC.

In the past few months, though, approvals have been given to increase the wages of several sectors of the employees, namely, teachers and professors, judges, and others. Several clarifications and modifications also ensued to dispel concerns regarding allowances. It remains to be seen who will blink first, and if the same system of pay revision will remain in place for the future. 

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Topics: Compensation & Benefits

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