The Seventh Pay Commission report is
awaited; it is that time of the decade when Government offices are buzz with
expectation and excitement. Revision of salaries of the government employees in
the country is a decennial affair. Governments, several of them, have continued
with this practice despite the recommendations to the contrary, that is, to
reduce the period and have a more frequent pay revision of the government
employees.
The 7th Pay Commission was appointed in 2014; normally the
Commissions have been asked give their reports after due study of pay and
allowances of government employees in 18 months. Last month, that is August,
the Commission ought to have submitted it’s report. Revision of pay scales
is with effect from 1st. Jan 2016. If there is delay in implementation, which
generally is the norm, it will be with retrospective effect without change in
the due date.
Starting from the fourth pay
commission, award of every commission has bought a virtual bonanza to the
employees of the Government. Goa has one of the highest proportion of
government employees to population. The all India average relatively is lower.
There are 48 lakh Central Government employees and over one crore state and
local government staff. Out of a total workforce of 47 Plus crore, almost 44
crore are in the unorganized sector. They are not covered by any Pay
Commission; from time to time governments do fix the minimum wage rate which is
neither uniform across the country nor is it followed strictly in letter and
spirit. Viewed from this perspective, the pay panel’s exercise is not
significant.
Yet, the Pay Commission
recommendations are important from different perspectives. It has the potential
to kick start the economy that has not seen growth revival for quite some time.
Latest release of data regarding inflation in the economy indicates the decline
of retail inflation for the second successive month. Actually, the WPI is in
the red, which is a rare phenomenon. By putting more money in the hands
of the employees, government might succeed in creating more demand for goods
and services. With federal states following in the footsteps of the centre, it
is likely to sustain the enhanced demand for a longer time. At least with a time
lag it is likely to have a rub off effect on pay and allowances in the
organized private sector.
Pay and pension of central
government employees amount to a full 1% of nation’s GDP. More pay will only
further add to the burden of the exchequer. When the last pay commission’s
recommendations were implemented, the fiscal deficit doubled to more than 6% in
2008-09. According to the estimates submitted to the Parliament,
government employees are likely to get a pay hike of around 16%. According to
an estimate, this would be around 0.2 to 0.3% of GDP. Going by the
recommendations of the previous commissions, the average gross increase would
be much higher, may even top 40%. The fear of higher fiscal deficit may force
the government to effect cuts in spending, with education and healthcare more
likely to be the ‘soft’ targets. This will hurt the poor and lower middle
class sections of our society. The government is also likely to go slow on
investment in infrastructure; even in normal times government’s expenditure on
capital goods is not high. This will impact the recovery process in the economy
and adversely impact the GDP growth rate.
Since the appointment of 7th Pay
Commission was done well in advance, there is enough lead time for submission
of report. Further, if the Government takes an early decision to implement the
recommendations of pay revision, it will not have to shoulder the burden of
arrears of pay. In all the previous pay commissions, payment of arrears was a
huge financial burden; in the last pay commission revision, arrears of salary
hikes for up to two years had to be paid by governments.
Apart from pay hike, there are other
expectations from this pay panel. Keeping in view the rise in life expectancy
and dearth of competent staff, the age of retirement may be tweaked in favour
of the employees. Performance-linked pay is another area the commission may
take a serious look at. Flexible working hours to facilitate women and persons
with certain disabilities deserve consideration by the pay panel. The
recommendations, therefore, are significant and have far-reaching impact.
Source: http://www.navhindtimes.in
