Published On: Sat, Nov 21st, 2015

Govt may discontinue appointing Pay Commissions in future

New Delhi: The government is likely to discontinue the practice of appointing pay commissions in future to suggest salary structure and other perks for all central government employees and pensioners and to form a permanent pay panel for looking salary related matters of government employees.

Seventh Pay Commission Chairman Justice A K Mathur

Seventh Pay Commission Chairman Justice A K Mathur

The government constitutes the Pay Commission almost every 10 years to revise the pay scale of its employees and often these are adopted by states after some modifications.

According to The Financial Express’s articles, the government could discontinue the practice of appointing pay commissions every 10 years to suggest salary revisions for its employees, justice A K Mathur, chairman of the Seventh Pay Commission, said.

Mathur said, the government could have a mechanism for annual increment in salaries, taking into account all aspects including the consumer prices. While the dearness allowance offsets the impact of retail inflation on the salaries of government employees, the salary increases are now accorded by way of the pay commission-awarded “fitment” factor and annual increment.

Pay Commissions makes much impact on the fiscal deficit, since pay commission awards come once in 10 years, the two to three years subsequent to each award tend to be fiscally stressful for the central government. States also suffered major blows to their finances for implementation of pay commission reports.

Mathur said, this could be avoided if a system of annual salary hikes is implemented for central government employees.

“The government should review the salary of government employees every year looking into the data available to it and based on the price index,” Mathur told The Financial Express in an interview.

The Seventh Pay Commission headed by Mathur also recommended that the pay matrix may be reviewed periodically without waiting for the long period of ten years. It can be reviewed and revised on the basis of the Aykroyd formula which takes into consideration the changes prices of the commodities that constitute a common man’s basket, which the Labour Bureau at Shimla reviews periodically.

The Pay Commission also suggested that this should be made the basis for revision of that pay matrix periodically without waiting for another Pay Commission.

According to Mathur’s view, the government requires to set up a permanent pay panel to give recommendations to the government from time to time on issues pertaining to pay structure of central government employees.

The permanent pay panel would recommend salary and allowance hikes in keeping with the rising inflation rate, which will be implemented by the government. Then it will not be necessary to form a new commission after every 10 years for central government employees.

However, the Seventh Pay Commission Thursday submitted its reports of 23.55 per cent pay hike of central government employees to the Finance Minister Arun Jaitley.

The overall increase in pay and allowances and pensions over the business-as-usual scenario will be 23.55 per cent, the report said.

The Seventh Pay Commission recommended raise in basic pay, a key segment that determines several allowances, is only 14.27 per cent – the lowest in 70 years. The previous commission had recommended a 20 per cent hike, which the government doubled while implementing it in 2008.

The Pay Commission recommendations show that there is a huge gap between minimum and maximum pay as the commission recommended fixing the highest basic salary at Rs 250,000 and the lowest at Rs 18,000.

National trade unions linked to BJP and the Left Friday said the proposed hike was lowest in many decades and were not in sync with inflation.

Read Also: Seventh Pay Commission may recommend permanent pay panel


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