7th Pay Commission on pay and pension: Once the recommendations of the 7th Pay Commission are implemented, the biggest gainers will be pensioners. While the 7th Pay Commission pay scale increase of serving employees is 16%, pensioners will see a 23.63% rise. However, the big gain per se is in allowances, which rise by as much as 63%.
Here we will elaborate on the 7th Pay Commission pension recommendations:
1. The 7th Pay Commission report has determined the initial starting salary at the lowest entry point in government at Rs 18,000, when the comparable wage for a helper in the private sector would be only about Rs 9,000 to Rs 11,000 per month. Currently, in the government, this employee gets about Rs 15,750, including dearness allowance. In other words, if the proposals are accepted, with effect from the new year, the increase in emoluments at the lowest level in the government will be a minimum of 14.2%
2. The figure of Rs 18,000 has been determined after considering the minimum nutritional, clothing, fuel, recreational and housing requirements for a family of four. The 7th Pay Commission pay scale report has, by and large, followed the methodology approved by 15th Indian Labour Commission. Its approach is based on the idealistic notion that the government should set standards by being an ideal employer
3. The 7th Pay Commission pay scale report then divides the proposed new minimum basic pay by the existing basic salary of Rs 7,000 to determine a factor of 2.57. With some small modifications, this is applied across the board to determine salaries all along the hierarchy comprising fifteen levels in all.
4. At the apex level of secretary to the government, this The 7th Pay Commission pay scale report multiplier is 2.81. The salary at this level will thus increase from the existing Rs 80,000 per month (Rs 1,78,000 with dearness allowance) to Rs 2,25,000 per month.
5. Along with increase in pensions of 23.66%, The 7th Pay Commission report proposals will require an additional outlay of Rs 1,02,100 crore per annum (0.65% of GDP). 7th Pay Commission is confident that the government will be able to absorb this expenditure without straining the fisc.
6. It is worthwhile also to examine the opportunity cost of this 7th Pay Commission report expenditure and its overall effect on the economy; 89% of the persons employed by the central government, admits the 7th Pay Commission, belong to Group ‘C’ where functions are clerical; 8% of the personnel belong to Group ‘B’ where responsibilities tend to relate to first level supervision of clerical cadres or day-to-day implementation of policies and rules. This leaves just three 3% Group ‘A personnel’ whose responsibilities are either managerial or relate to policy formulation or evaluation. The bulk of the expenditure of Rs 1.02 lakh crore thus relates to augmenting the salaries and allowances of Group ‘C’ employees where the value added to decision-making is minimal. Increasing their pay and allowances further, in economic terms, means only increasing the subsidy to a privileged segment of the population.
7. On the other hand, the 3% Group ‘A’ employees—particularly at the top echelons—are being paid much below the market wage, that is, they would earn much more were they to carry out comparable functions outside the government. Even after the 7th Pay Commission recommendations, a secretary to the government, would get only Rs 2,25,000 per month. Even a middle-level executive in a multi-national corporation would be earning a higher salary than this.
source:financialexpress.com
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