The PSU employees, pursuant to a notification issued by the government on Tuesday, will get industrial dearness allowance (IDA) at 84.4% of basic pay with effect from July 1. The government had earlier increased the IDA for officers and workers of the CPSEs to 79.4% of the basic pay, which came into effect on April 1.
The decision to raise IDA, according to a Standing Conference of Public Enterprises (SCOPE) official, will benefit everyone including board level executives, below board level officers, employees and workers of the central PSUs.
The IDA for the PSU staffs are revised every quarter depending upon the movement of the Consumer Price Index (CPI) with a view to compensate them for the rising cost of living.
The hike in IDA will provide some relief to the CPSE staff, reeling under the spate of rapidly rising wholesale price-based inflation, which is nearing a 13-year high mark of 12%. The next installment of the IDA will become due on October 1, 2008.
With regard to the other government employees, the Centre had referred the recommendations of the Sixth Pay Commission to a committee headed by Cabinet secretary KM Chandrasekhar following protest by the trade unions that proposed raise was insufficient and not acceptable to them.
Furthermore, the second pay revision committee set up under M Jagannadha Rao (retd judge, Supreme Court) to suggest changes in the pay packet for the PSU employees, have already submitted its report to the heavy industries minister. The report has recommended a significant hike in the pay package giving more weight-age to performance related payment ranging from 40-200% and introducing ESOPS.
The recommendations, which are likely to be introduced by December this year, are expected to benefit around 2.5 lakh PSU executives. The seventh round of pay revision negotiations for the remaining 13.5 lakh workers is going on between the respective trade unions and managements.
Once cleared, the top PSU executives will take home a salary of anything over Rs 3,40,000 per month as the committee has raised the range of basic pay of CMDs from Rs 55,000 to 1,00,000 depending up on the category. Also they will be eligible for allowances that will be 50% of the basic and an annual increment which could be anywhere between 2-4% of the basic pay.
The directors basic pay will range from Rs 50,000 to Rs 80,000 per month. All these executive level officers will be entitled for a risk pay which will range from Rs 1,100 to Rs 25,000 depending up on the performance of the PSU .
The increased pay will be linked with the performance of the PSUs. The better the PSU performs, fatter will be the pay packet for the officers. The proposed hike will not bleed the government exchequer as the PSUs will foot the bill.
The compensation package has been decided independent of what has been proposed for the government employees by the Sixth Pay Commission. The revision is an attempt to progressively align the pay of PSU executives with those of their private sector counterparts.