Chairman of the 7th Central Pay Commission (SCPC), Justice AK Mathur has hit the nail on the head by suggesting the Centre should discontinue the practice of appointing pay commissions every 10 years to suggest salary revisions for its staff.
Why can’t the salary and pay hikes for the government employees also be on the lines of the private sector?
Constituting the central pay commission and implementing its recommendations has become more of a political issue than an exercise based on sound HR practices.
The UPA government appointed the SCPC on February 28, 2014, ahead of the Lok Sabha polls.
Implementing the hikes in salaries and pensions of the central government employees of the SCPC now will be a major burden on the government finances despite the fact that even those associated with the SCPC are convinced that the pay hikes for a large chunk of government employees are illogical.
But, the government has no other option than to go for the suggested hikes and pretend and project in public that it will have no major impact.
While it is true that the NDA government can’t do anything about correcting this situation now, it must initiate a debate on the need to end this pay commission politics and shifting to a framework for annual increment in salaries accommodating all the aspects including the consumer prices.
At present, the dearness allowance is increased to take care of the retail inflation and pay commission decides on the salary increases. Clearly, a 10-year exercise is not the right one from any angle.
The need today is to bring in and promote efficiency and expertise in the government and weed out corruption and inefficiency the way prime minister Narendra Modi wants — the pay commission model has largely done the opposite.
Though the SCPC has more or less limited its recommendations to the space that the government said it had to implement them, there is no doubt this is a pain in the neck for its finances, which will spread to the state governments also going ahead.
The SCPC has proposed an increase of 23.55% in the pay (salary and allowances) of central government employees and similar increase in pensions, which will become effective from January 1, 2016.
This would mean a projected payout burden of Rs 1.02 lakh crore in FY17, or 0.65% of GDP.
In effect, however, the cost would be much larger than this. Should this be replicated again after 10 years?