7th Central Pay Commission Report

Towards More Neo-liberal Adjustments

Further Away From Parity and Democratic Functioning

There was speculation that the report of the 7th Central Pay Commission was withheld from publication till the Bihar elections were over to avoid any adverse impact on BJP-NDA electoral performance. The report, published on 19 November, is rightly being criticised vehemently by the trade unions. It adds nothing substantial to the government employees’ pay packet, and is in line with the Finance Minister’s Expenditure Framework statement tabled in Parliament last August where he prophetically had assumed that the pace of salary outgo of central government employees will increase further in 2016-17 at 15.79 per cent after the 7th Central Pay Commission report!

The real increase over the previously set minimum pay is only 14.29% which is lowest in the last fifty years. The 6th CPC had made an increase in minimum pay level by up to 56% (the highest so far). The ratio of maximum to minimum pay (pay gap) was 11.4 after 6th pay commission which is now increased to 12.5. The trade unions had demanded a minimum pay of Rs. 26000 pm and the pay gap to be reduced to 1:8.

The crux of the matter lies in the calculation of the Minimum Pay level which according to the 7th CPC was ‘need based’ as per the norms set by the 15th Indian Labour Conference (ILC) and Apex court guidelines. Central TUs say this ought to be above Rs. 26000 and have termed 7th CPC’s Minimum Pay calculations of Rs. 18000 as distorted. Trade unions had also demanded that the 15th ILC norms (prepared in 1957) to be revised for including old and dependent parents as additional consumption units. There was also a demand of implementing the 7th CPC from 1 January 2014 which has been rejected and new pay levels will be effective from 1 January 2016 only. The House rent allowance (HRA) has been reduced from 30, 20 and 10% of basic pay to 24, 16 and 8% of basic pay for Class X, Y and Z cities respectively which is a retrograde recommendation.

The 7th CPC has certainly not taken into account the current level of inflation and high prices though it argues that a mean of prices of different commodities between a time span of July 2014 to June 2015 was considered. When it is going to be implemented from January 2016 onwards, why were the current Rs. 150 per kg dal, Rs. 60 per kg tomato, Rs. 50 per kg onion, etc. not a serious matter before the 7th CPC? The projected 14.3% pay increase will simply be consumed by the actual high rates of prices leaving the employee empty handed. Moreover, the extremely high costs of education and other services in an era of privatisation of basic amenities were not a concern for the 7th CPC. The 15th ILC norms, even if there were justifiable calculations, cannot probably address all basic requirements in today’s liberalised policy regime because they were set in 1957.

The 7th CPC will affect 47 lakh Central Government Employees, of which nearly 30% are defence personnel, and 51 lakh pensioners. But CPC reports are awaited by all kinds of government sector employees as this sets a benchmark level of pay scales for all. State governments increase the pay levels after every CPC, on the lines indicated by the CPC with some alterations– and this in turn sets a benchmark for the wages of heavily underpaid employees outside the Government sector. But this time, the 7th CPC has instead tried to reverse the norm by conducting a survey in collaboration with the IIMA of actual pay levels of employees in the private and government sector. And on the basis of the survey, they have tried to justify the negligible pay increase by claiming that Government employees are paid far higher wages compared to those in the private/industrial sector! It is well known that in India, the private sector severely underpays its workforce, and even minimum wages for industrial workers fixed by the Government are highly unsatisfactory. Instead of raising the bar and setting a benchmark for the private sector, the Government is taking the shamefully low wage levels of the private sector as its own benchmark! This exposes the Government’s neoliberal policy direction of bringing the Government sector services and pay structures in line with those in the private sector. In fact, the previous two CPCs had begun this process of amending the structure of services and pay itself to make it compatible with a neoliberal economy.

This time a new pay matrix with 18 pay levels has been proposed in place of existing pay structure which was divided into pay bands and grade pay categories for class A, B and C employees. The Pay Commission has recommended the continuation of outsourcing (read contractualisation) of government jobs “in the interest of economy and efficiency” particularly of lower pay structures – “tasks of a routine nature, typically those relating to housekeeping, maintenance, related activities, data entry, driving, and so on, which are normally bundled and entrusted to agencies”. It has also cited the removal of category ‘D’ employees by the earlier pay commission as a reason for the same. Why could not the 7th CPC have restored that category again, instead of taking this as a justification to give way to more privatisation and contractualisation of government services? This, in spite of the Commission’s own admission that “it is evident that the nature of jobs being contracted out were of a routine nature, involving a low level of remuneration”!

Out of total sanctioned strength of all government departments, 19 percent positions are vacant. Ministry of Science and Tech. (47% posts as vacant on 1.1.2014), Ministry of Finance (46%), Ministry of Civil Aviation (44%), Ministry of Power (45%), Election Commission (43%) are among the departments with highest vacancies.

Data reveals that 9,47,586 are within the age group of 50-60 years hence in ten years they all will retire leaving more vacant posts. The Commission has not proposed any measures to fill those vacancies left out for years, instead what it thinks is appropriate is to ask for “a clear guidance from the government on jobs that can and should be contracted out”. The 7th CPC is concerned about losing experienced high level personnel “which entails unquantifiable costs as new recruits will require training and on the job skills.” But it resolves this worry – by suggesting a database of retiring personnel who can be utilised though contractual appointments!

The Commission has adversely recommended that the Department of Posts should budget and account for remuneration of Gramin Dak Sevaks under a head distinct from ‘Salaries’, as they are not reckoned as Central Government employees. There are nearly 3 lakh Dak Sevaks and they have every right to be recognised as government employee and to be regularised and assimilated in the Department of Posts.

There was a demand of increasing the frequency of Modified Assured Career Progression (MACP) which has been rejected; instead the benchmark for performance appraisal as well as for regular promotions has been enhanced from ‘Good’ to ‘Very Good’ besides considering “more stringent criteria such as clearing of departmental examinations or mandatory training before grant of MACP.” The Commission has proposed withholding of annual increments in the case of those employees who are not able to meet the benchmark either for MACP or a regular promotion within the first 20 years of their service, and simultaneously, gives them an option of opting for the VRS. Provisions are already there in services rules for penal action against non-performing, recalcitrant employees or any kind of indiscipline then what does such recommendation imply for an employee? Besides being an additional measure for phasing out of regular employees, it requires one to work under more oppressive and undemocratic conditions and according to whims and wishes of the bosses so that a performance level of ‘Very Good’ is retained! This again is more in line with neo-liberal and corporate type restructuring of government sector.

Gratuity Ceiling has been raised from Rs. 10 to Rs. 20 lakhs which is justifiable but this will go to benefit only the higher paid officers as lower level employees could never reach even the earlier limit of 10 lakhs. The rate of annual increment is determined at 3% which does not commensurate with the growing family expenses owing to rising prices and cost of various amenities. The 7th CPC has recommended for complete parity in rate of pensions (on the lines of One Rank One Pension) through a formula of fixing the existing Pay Band and Grade Pay in the Pay Matrix which is a welcome step.

An interesting comparison of size and deployment of personnel in USA and India has been noted by the 7th CPC which points to the following: (a) The size of the Central Government in India, in terms of personnel per lakh of population at 139 was much lower than the US where the corresponding figure is 668; and (b) in the US as well as in India, there is a concentration of personnel in a handful of departments, more so in India where growth in number of employees was accounted mainly to the new recruitment in police force. This indicates a huge scarcity of workforce as well as increased workload one the one hand, and increased militarisation on the other hand.

In a nutshell the 7th CPC recommendations are more in line with neo-liberal restructuring of government sector, does not address rising costs of livelihood, are more towards contractualisation and corporatisation of governance, and have nothing to do with employment security and pay parity of employees. There is need to ensure widespread support and solidarity with the trade union organisations and employees’ federations who have decided to oppose these adverse and retrograde recommendations.

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