Release of IFTU National Committee on the Seventh Pay Commission Report

The IFTU National Committee holds that the Seventh Pay Commission Report released recently by the Central Govt. is a severe let down for the major sections of the 47 lakh govt employees it will cover. Setting a minimum wage of Rs.18,000 per month at the lower end marks a increase of a mere 14.33 % over the earlier wage. This, when at the other end of the spectrum, Secretaries will be entitled to Rs.2.25 lakhs per month (Rs. 2.5 lakh for Cabinet Secretary) where as they were earlier below the one lakh mark. This increase of 14.33% is less than half of what was given in the earlier two pay panels. This is also a very low increase in the context of the sharpest price rise witnessed over the last ten years. Secondly, the employees at the lower end of the spectrum have got a very small increase where as the upper bracket has got a much higher increase, resulting in greater disparity with the increase of the huge gap between the minimum and the maximum.

The overall increase of 23.55% in pay and pension of the Govt. employees and the 52 lakh retirees compared to the 35% increase in the last Pay Commission was to be expected given that the terms of reference of the 7th Commission itself directed that the fiscal situation should be kept in mind – to conform to ‘fiscal prudence’. This has been obediently followed. However the Central Govt. is going all out to dole out bonanza to foreign and domestic big business. Despite all talk of the increase in revenue burden, the share of expenditure on the Govt. employees has been coming down. The annual rate of increment remains the same as that of the last Commission at 3% by removing pay bands and grade pay. A new pay matrix has been proposed subsuming the earlier grade pay. However the impact on the GDP will decrease. It was 0.775 of the GDP last time but this time the increased burden on the GDP will be 0.65%. The total financial impact has been stated as Rs. 1.02 lakh crores, Rs. 73,650 crores on the General Budget and Rs. 28,450 crores on the Railway Budget. The CAGR (Compound Annual Growth Rate) of the recommendation is just 10%.

There are other changes. While the increase in pay is 16% of the total hike, the increase in allowances accounts for 63% and increase in pension for 24%. However, abolition of 52 allowances has been recommended and 32 others are proposed to be merged. A new concept of performance related pay has been included for all categories and annual increment will be dependent on performance. If performance is under question, there will be 5-6% deduction in salary and retirement at 55years. Career progression has also been modified and only ‘very good’ performers will go to the next level. Making annual increment and career progression subject to assessment by officials will create job and career uncertainty among employees and will hamper their work. It will also increase control of officers thereby undermining the organizations of employees in Govt. departments. The demands for correcting anomalies and discrepancies in the pay structures have been largely rejected though a number of such issues were raised by employees of various departments.

Importantly, the demand to regularize contract employees has not been touched and neither has the issue of their benefits. Equal work for equal pay has been ignored quite in keeping with various dilutions of the highest Court and also the thrust of the proposed labour law amendments. It must be remembered that contract workers constitute the large and increasing chunk among employees. Also contractualization has been much more sweeping among lower rung employees, in keeping with the anti poor and anti labour attitude of the Govt.


Aparna                                                                                    B. Pradeep

President                                                                    General Secretary

Dated 22nd Nov 2015