Revision to be based on paying capacity
In a move that could boost consumption and stimulate the economy, central public sector enterprises (CPSEs) are likely to pay out an additional R20,000 crore in 2017-18 as recompense to 12 lakh employees. This would be the second time in two years that government employees are getting pay hikes; central government staff got hefty pay hikes last year following the implementation of the 7th Pay Commission’s recommendations.
The salary revision for four lakh CPSE executives will likely take place in July with retrospective effect from January 1, 2017, and is expected to cost R8,000 crore/year, sources told FE. These pay hikes are expected to be followed by a wage revision for over 8 lakh workers which would cost the CPSEs another R12,000 crore in a year, they added.
The salary revision exercise, based on the recommendations of the 3rd Pay Revision Committee (PRC) constituted by the department of public enterprises, will be carried out by each CPSE separately by negotiating with employee unions.
The 3rd PRC, which broadly followed the 7th Central Pay Commission award, has suggested a 15% pay hike (on sum of basic pay, stagnation increments and industrial dearness allowance) subject to ability of the CPSEs to bear the financial burden. The pay hike can be nil for executives of some CPSEs if the additional cost due to salary revision is over 40% of their average profit before tax of last 3 years. The 7th CPC had recommended a 14.3% pay increase for central government staff.
The PRC has recommended a minimum pay of Rs 30,000/month, from Rs 12,600/month now, for executives and a maximum of Rs 3.7 lakh for CMDs, from Rs 1.25 lakh, (for Schedule A CPSEs). The maximum pay of CMDs varies for other category CPSEs. Depending on profits, the CPSEs are categorised into different schedules, with highest being Schedule A, followed by B, C and D.
The PRC’s report on salary revision of executives is currently with the Cabinet secretariat. The government is likely to form a committee of secretaries shortly to look into the report before the Union Cabinet gives the go-ahead for its implementation around July.
The salary and wage bill of 235 operating CPSEs stood at Rs 1.27 lakh crore in FY15 and is estimated to have reached over Rs 1.4 lakh crore in FY17. The salary hike for executives, who share nearly 40% of the total pay bill of CPSEs, are likely to be implemented by only profitable companies, whose number is understood to have come down to 140 in FY16 against 157 in FY15. However, the wage hike for workers is likely to take place even in non-profitable ones, sources said.
The once-in-ten-years salary and pension revision for over 1 crore central government staffers and pensioners entailed an additional cost of Rs 84,933 crore in FY17. The revised allowances, if implemented from April, may cost an additional Rs 29,000 crore to the government (including railways) in FY18.
The 7th Pay panel’s award implementation is usually followed by the public sector undertakings as well as state governments. Besides additional pay to CPSE staff, the likely pay revision for state government staff could give a consumption-led boost to the economy in FY18.