Published On: Fri, Oct 27th, 2017

7th Pay Commission: Minimum pay hike ‘good for work but to be processed with caution’

New Delhi: Under the BJP-led government, the minimum pay of central government employees is likely to go up to Rs 21,000 from Rs 18,000 from the existing 2.57 to fitment factor 3.00 from 1 January, before rising by 2026.

Finance Minister Arun Jaitley

FM Arun Jaitley had agreed to raise the minimum pay.

A union leader of central government employees said government employees on the minimum pay were not currently earning enough to feed their families.

“What we have noticed specifically is the growth in demand for food by people who are working and receiving minimum pay, not just beneficiaries,” he said.

“That increase has grown year on year on year over the last few years.”

There was one way of knowing if the planned increases would make a difference, he added.

“In two years … the need for food to sustain people on a month-to-month basis, who are already working, was wiped out, I think government should have something to rejoice in there,” he also said.

In the meantime, the salary increase would be a big step towards moving a large number of central government employees out of the depth of poverty, he told The Sen Times.

He said it was “great” that the minimum wage would increase but benefit levels should also be raised to all employees with fitment factor 3.68 from 2.57 uniformly.

The government is likely to to go ahead for hike in minimum pay Rs 21,000 from Rs 18,000 from the existing 2.57 to fitment factor 3.00 but unions are demanding for hiking minimum pay Rs 18,000 to Rs 26,000 and they asked to raising fitment factor 3.68 times from 2.57 times,”  a top official of the finance ministry told The Sen Times on condition of anonymity.

However, economic experts are worried about the its effect on exchequer.

“The idea that boosting the minimum pay can help low-pay workers is not a new idea,” they said.

But there are very good reasons to carefully consider how a jump in the minimum pay could negatively impact on exchequer.

The BJP-led Modi government has failed miserably in most of its economic policies like note ban and Goods and Services Tax (GST), and minimum pay hikes are no exception, they said.

The hike is not because of any increases in productivity or skills — the government will strategize about how to recover the added costs. Can government pass it on to citizens as tax? Should government invest more in automation? And of course: Should government decrease the size of its work force?

The government approved for hike in pay under 7th pay commission recommendations, giving minimum basic pay from Rs 7,000 to Rs 18,000 per month with fitment factor 2.57 on June 29, which have been paid with arrears, effective from January 1, 2016.

Finance Minister Arun Jaitley had agreed to raise the minimum pay in a meeting with the central government employees’ unions leaders on June 30, 2016.

So, the government had form National Anomaly Committee (NAC) under pressure of central government employees unions in September, 2016 to look into pay anomalies arising out of the implementation of the 7th Pay Commission’s recommendations.

“The government has asked the NAC to go ahead for hike in minimum pay with fitment factor 3.00 and the Union Cabinet will take up the proposal for hike in minimum pay with fitment factor 3.00 in January,” the official said.

“If the 2.57 fitment formula is tinkered with 3.00, the salary and pension in general for all segments of employees will go up,” the official assured.


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