The pay commission is responsible to revise the salary of all government employees keeping the result of inflation in the economy under consideration. Since 1947, Pay Commission has been the responsible factor for the changes regarding the salary structure of Government employees. If you are a government employee, then you must be familiar with the decisions of the Pay Commission. As they directly impact the earnings. In case, you are not! Then also critical decisions by the pay commission influence the exchequer.
Relationship of Inflation With the Pay Commission
Inflation is the rise in average prices of different goods, services, and commodities which can increase the overall cost of living. As a result, the purchasing power of the money gets reduced. Inflation is always measured in the terms of CPI(Consumer Price Index ) and Wholesale Price Index(WPI).CPI and WPI affect the monetary policies which in turn affect the loans and savings. That means if you earn 1000 rupees it will be worth 960 rupees if the inflation rate is 4%. Hence, it becomes necessary for the pay commission to make adjustments in the salary otherwise, it would have a hard hit on the economy.
Categories Included in The Pay Commission
The Pay Commission is generally constituted every 10 years post-independence. And, there are several important factors that a pay commission takes under consideration like- financial resources, the economic state of the country which overall impact the revenue for central and state governments.
These categories of Employees are impacted from the direct scope of pay commission:
- Employees of the Supreme Court
- All members of parliament excluding RBI.
- Tier II Central Government Employees
- Officers and employees of the Indian Audit and Account Department
- Staff belonging to the Indian Defence forces.
- Personnel of union territories
Basic Recommendations From the Current 7th Pay Commission
7thPay Commission has come up with several recommendations from January 1, 2016.
Here are some of them:
- The minimum salary for entry-level shall be INR 18,000 per month and for
Class I officer shall be 56,100 INR. - Health Insurance for the Central Government employees and pensioners.
- The enhanced limit in the gratuity is 20 lakhs instead of 10 lakhs.
- Military Service Pay will be admissible only to the defense forces Staffs inclusive of Brigadiers.
- A health insurance scheme has been introduced for the Central Government Employees and pensioners.
Latest Updates of 7th Pay Commission
Due to the outbreak of the pandemic, the Government of India has decided to not give an additional installment of dearness allowance for the Central Government employees and dearness relief to the central government pensioners which were due from 1st July 2020 and 1Jan 2021.
But the good part is the dearness allowance (DA) and Dearness relief for the central employees and pensioners would increase from the current rate of 17% to about 28% which is a 3% hike from January to June 2020 and a 4% hike from January to June 2021. And, this supposed to be applied from July 1, 2021.
Future Scope Of 8th Pay Commission :
In the future, Central-government employees might be given salaries on the basis of a new system that is the Aykroyd formula instead of the 7th pay commission. The formula is named after Wallace Ruddell Aykroyd who was a famous nutritionist and was the first Director in the Department of Nutrition, Food, and Agricultural organization. Under this formula, salary hikes would be based on performance and inflation rates. Taking into account the basic needs, Justice A.K Mathur who headed the 7th pay commission suggested that salaries of Government employees should be reviewed every year. He suggested instead of waiting every 10 years, a new salary structure based on the Aykroyd formula should be taken into consideration.
Until now the government was revising the salaries under the automatic pay regimen if there was a hike of 50% Deafness allowance. But, with the Aykroyd formula, it would be easier to fix remuneration. In case, this arrives with proper terms and conditions, it is quite possible that one would get an appropriate pay package in order to meet their basic needs
Possible Changes From Akroyd Formula:
- According to this formula, the minimum salary of any government employee would be around 18,000 rupees.
- Aykroyd formula might change the status of employees, Earlier it was based on the grade pay but, with this formula, it will be decided on the basis of placement status in the pay matrix.
- Civilians, defense personnel, and military nurses will be covered under different pay matrices.
- Minimum pay in the Akroyd formula forms the starting point of the matrix. that is why the horizontal range of the pay matrix level corresponds to the functional role in the hierarchy. And, the vertical range for every level represents the pay progression, and employees will move within each level with a yearly progression of 3%.
- Minimum Pay Scale For All Government Employees
Many people in India are dependent on their employment by the Government of India. That is what makes the government the target employer in the country. So, it becomes really crucial that the government make policies and induce the right formulas that can benefit Central employees.
