Memorandum Reg Minimum Pay & Multiplying Factor of 7th CPC

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Memorandum Reg Minimum Pay & Multiplying Factor of 7th CPC – submitted by IRTSA

INDIAN RAILWAYS TECHNICAL SUPERVISORS ASSOCIATION
(Estd. 1965, Regd. No.1329, Website http://www.irtsa.net )

M. Shanmugam,
Central President, IRTSA
# 4, Sixth Street, TVS Nagar, Padi, Chennai – 600050.
Email- cpirtsa@yahoo.com
Mob: 09443140817

Harchandan Singh,
General Secretary, IRTSA,
C.Hq. 32, Phase 6, Mohali, Chandigarh-160055.
Email-gsirtsa@yahoo.com
(Ph:0172-2228306, 9316131598)

No:IRTSA/CHQ / Memo CPC MF / 2016-16

Date: 14-9-2016

Additional Secretary (Expenditure),
Government of India,
North Block,
New Delhi-110001

For kind consideration of the Committee of Secretaries
– On Minimum Pay & Fitment Factor of 7th CPC

Subject: MINIMUM PAY & MULTIPLE FACTOR AFTER 7TH CPC

Reference: i) Para 10.1.67 of Report of 7th Pay Commission
ii) Para 3 & 4 of Resolution No. 1-2/2016-IC dated 25-7-2016 of Govt of India on 7th CPC Report

We have to make the following submissions for the kind consideration of the Committee for regarding Minimum Pay and Fitment / Multiplication Factor:

1. MODIFICATIONS ACCEPTED BY SUPREME COURT & PRESENT DAY REQUIREMENTS IGNORED BY 7TH CPC FOR DECIDING MINIMUM PAY BY Dr. W. AYKROYED FORMULA

a) The Minimum Pay Fixed at Rs.18000 by the 7th CPC is very much unjust and meager and ignores the accepted norms in this regard.

b) The Minimum wage of Rs.18000 proposed by 7th Pay Commission is based on Dr Aykroyed
formula for Minimum Need Based Wage which was adopted by 15th Indian Labour Conference held in 1957. This needed to be updated as per present day requirements. As per law of natural justice and as per directions of the Supreme Court of India issued as long back as in 1991 in the case of Reputekos Brett & Co. Vs  Workers & others.

c) Prescribed provision of 25% to cover education, recreation, festivals & medical expenses has been reduced to 15% by 7th CPC. Similarly provision for housing has been reduced from prescribed 7.5% to 3% which are totally inadequate, unjust and unrealistic..

d) In para 4.2.8, Step-1, 7th CPC indicated that a family is comprising of three consumption units, as per norms set by 15th Indian Labour Conference (ILC) in 1957.

e) Computing husband as one unit, wife as 0.8 unit and two children each below the age of 14 as 0.6 unit is very much inadequate and 15th ILC had not considered maintenance of aged parents.

f) Maintenance and Welfare of Parents and Senior Citizens Act, 2007 make it a legal obligation for children and heirs to provide maintenance to senior citizens and parents, by monthly allowance.

g) It is therefore, necessary that while calculating cost for maintenance household the aged parents should also be considered as 2 Units besdes the husband, wife,  two Children as consumption units per family and the same should be taken at least as four (if not five) instead of three.

h) Dr. W. Aykroyd formula on food & other requirements and associated requirements specified by 15th ILC shall be applied for 4 consumptio units per family.

i) Minimum Pay works out to be Rs.24,000 (instead of Rs.18000 recommended by the 7th CPC) and the multiple factor 3.43 (instead of 2.57 recommended by the 7th CPC)

j) Table-1 of 7th CPC for calculation of minimum pay needs to be redrawn as under by keeping 4 consumption unit per family:

Calculation of Minimum Pay as on 01.01.2016 for four consumption unit per family
    Per day 

PCU

 Unit Per month 

4 PCU

 Unit Price/ Unit 

Rs.

 Expenses 

Rs.
1 Rice/Wheat 475 gm 57.00 kg 25.93 1478.01
2 Dal (Toor/Urad/Moong) 80 gm 9.60 kg 97.84 939.26
3 Raw Vegetables 100 gm 12.00 kg 58.48 701.76
4 Green Vegetables 125 gm 15.00 kg 38.12 571.80
5 Other Vegetables 75 gm 9.00 kg 32.80 295.20
6 Fruits 120 gm 14.40 kg 64.16 923.90
7 Milk 200 ml 24.00 litre 37.74 905.76
8 Sugar/Jaggery 56 gm 6.72 kg 37.40 251.33
9 Edible Oil 40 gm 4.80 kg 114.02 547.30
10 Fish     3.33 kg 268.38 894.60
11 Meat     6.67 kg 400.90 2672.67
12 Egg     120 no. 4.27 512.40
13 Detergents etc     Rs/month 388.41 388.41
14 Clothing     7.33 meter 164.88 1208.57
15 Total (1-14) 12290.97
16 Fuel, Electricity, Water Charges 3072.74
17 Total-(15) divided by 0.8 15363.71
18 Marriage, Recreation, Festivals, etc. 2711.24
19 Total-(17) divided by 0.85 18074.95
20 Provide for Skill by adding 25% to (19) 4518.74
21 Sum (19+20) 22593.69
22 Housing @ 698.77
23 Total-Divide no.21 by 0.97 23292.47
24 Step up of 3% on No.23 as DA is projected at 125% on 01.01.2016 698.77
25 Final Minimum Pay as on 01.01.2016 (23+24) 23991.24
26 Rounding off 24000
                 

2. MINIMUM PLUS DA WITH 40% FIXATION BENEFIT

a) 40% fixation benefit was given over 4th CPC scale to 5th CPC scale in general to all the scales.

b) 40% of maximum of 5th CPC scale was given over 5th CPC scale as fixation benefit in general in 6th CPC scales.

c) But, only 14.29% (i.e even less than 15%) of basic pay has been given as fixation benefit is after the 7th CPC over 6th CPC pay, which is grievously inadequate.

d) Table-2 given below gives the comparison on fixation benefit given after 6th CPC & after 7th CPC.

Table-2

5th CPC 6th CPC % 

increase from 5th CPC Pay

+ DA to

6th CPC Pay

 6th CPC Pay + 

125% DA

 7th CPC Pay % increase from 6th CPC Pay 

+ DA to

7th CPC
5th CPC Pay 5th CPC Pay + DA 

86%

 PB GP 6th CPC Basic Pay
2750 5115 PB-1 1800 7000 36.85%   18000 14.29%
3050 5673 PB-1 1900 7730 36.26% 22050 19900 13.68%
3200 5952 PB-1 2000 8460 42.14% 24507 21700 19.66%
4000 7440 PB-1 2400 9910 33.20% 25389 25500 15.18%
4500 8370 PB-1 2800 11360 35.72% 30996 29200 16.18%
5000 9300 PB-2 4200 13500 45.16% 35186 35400 16.54%
7450 13857 PB-2 4600 17140 23.69% 42525 44900 22.50%
7500 13950 PB-2 4800 18150 30.11% 51314 47600 12.83%
8000 14880 PB-2 5400 21000 41.13% 59063 53100 16.37%
8000 14880 PB-3 5400 21000 41.13% 63882 56100 18.73%
10325 19205 PB-3 6600 25350 32.00% 66150 67700 16.58%
12000 22320 PB-3 7600 29500 32.17% 81302 78800 17.05%
14300 26598 PB-4 8700 46100 73.32% 94248 118500 14.24%
15400 28644 PB-4 8900 49100 71.41% 145215 131100 19.91%
14300 26598 PB-4 10000 53000 99.26% 153059 144200 35.21%

e) The Multiple Factor of 2.57 proposed by the Pay Commission for Pay Fixation is totally unjust, inadequate and arbitrary especially keeping in view the high  inflation (in real terms and wage rise in the organized sector including the PSUs after two revisions in PSUs since the Sixth CPC. The Fixation Benefit needs to  be at least 40% – as after the last two Pay Commissions and the Common Multiple Factor may please be fixed at least (Pay+DA) + 40% of Pay + DA, ie. 3.15  times of 6th CPC basic pay.

Table -3 showing calculation of new pay which will be equal to Pay + Pay fixation benefit equal to 40% of 6th CPC Pay + DA

1 Minimum Pay (6th CPC) 7000
2 DA @ 125% 8750
3 Pay + DA 15750
4 Fixation benefit (40% of Pay + DA) & Proposed increase in real wage 6300
5 New Pay (3+4) 22050
6 Increase in basic pay (in Rs.) (5 – 1) 15050
7 No. of times increase in basic pay 3.15
8 Real wage no. of times increase 1.40

k) Minimum Pay works out to be Rs.22,100 (instead of Rs.18000 recommended by the 7th CPC) and the multiple factor 3.15 (instead of 2.57 recommended by the 7th CPC)

3. MINIMUM PAY BY MERGER OF DA EVERY TIME THE DA RISES BY 50%

a) Merger of DA with Pay & Pension was always done every time the DA crossed 50%, except after the Sixth Pay Commission and that norm justifiably needs to be
restored.

b) Minimum Pay as on 1-1-2016 would be Rs.19,687 if DA was merged with Pay when the DA crossed 50% (from 1-1-2011) and when it crossed 100% even without any relief  or fixation benefit of 7th CPC and the Minimum Pay would bebRs. 22,483 or say 22,500 with 14.29% of total emoluments Fixation benefit given by the 7th CPC (which  itself was the lowest ever after any CPC) – as per detailed calculations submitted below:

4. a) Minimum Pay after DA Merger at 50% & 100% and with 14.29% rise.

7000×1.5 = 10500 x 1.5 = 15750×1.25 = Rs.19687×1.1429 = 22500.272 or say Rs.22000

b) Fitment Factor after DA Merger at 50% & 100% and with 14.29% rise

= 22500 / 7000 = 3.21 times of BP

c) Even if the Merger of DA was done only once after it crossed 50% (on 1-1-2011), Minimum Pay as on 1-1-2016 would have been Rs.18375 (without any relief or
fixation benefit of CPC) and Rs.20984 or say Rs.21000 with 14.2% Fixation benefit given by the 7th CPC as per details below:

d) Minimum Pay after DA Merger at 50% & 100% and 14.2% rise:

= 7000 x 1.5 = 10500 x 1.75 = 18375 x 1.1429 = Rs.21000.7875 or say Rs.21000.

e) Fitment Factor after DA Merger at 50% and 14.2% rise

21000 / 7000 = 3 times of BP

f) All the foregoing calculations of Minimum Pay and Fitment Factor are linked to only 14.2% rise of wages as inherent in the recommendations of 7th CPC – which is  the lowest ever rise after a Pay Commission in recent years.

g) The minimum Pay may please be fixed as Rs.22500 and the multiple factor for revision of Pay and Pension may please be fixed as 3.21.

4. It is, therefore, requested that, in view of above submissions:

a) Minimum Pay may please be fixed as Rs.24,000 and the multiple factor 3.43, by modifying Dr.W.Aykroyed Formula & 15th ILC norms by duly taking into account Maintenance and Welfare of Parents and Senior Citizens Act, 2007. (or)

b) Minimum Pay be fixed as Rs.22,100 and the multiple factor 3.15 by giving 40% fixation benefit for the 6th CPC Pay & DA. (or)

c) Minimum Pay may please be fixed as Rs.22500 and the multiple factor for revision of Pay and Pension may please be fixed as 3.21, by merging the DA with Pay
whenever it crossed 50% with fixation benefit of 14.2% equitant to the rise recommended by 7th CPC.

Thanking you in anticipation,

Yours faithfully,

sd/-
Harchandan Singh,
General Secretary, IRTSA

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1 thought on “Memorandum Reg Minimum Pay & Multiplying Factor of 7th CPC”

  1. Another thing We should Clarify that We don’t want 7 CPC. Only 50% DA merger may be done & old 6 CPC dA Calculation we need.
    1)7000 + 50 % DA Merge= 10500 on 1.1.2011
    Again 10250 + 50% DA Merge=15750 on 1.1.2016

    15750×1.25 (25% DA) 19687 Let it be NEW BASIC & or Rounded up to 19700
    But the DA will be 7 % as per 6 CPC Rule in July 2016.
    Total pay in july 2016 15750+32% DA =20790
    But in 7 CPC 18000+ 2% DA=18360. Then Why We shall Opt for 7 CPC. Again allowance will be increased on New Basic After DA MErger.
    2)-Basic as on 1.1.2016 as per 6 CPC & 50% DA Merger it is 15750

    Now DA is 25% +7 % in July.=32% Then DA in Jan-2017 it will be 8%. as per old Formula.
    Then again when DA will reach 50% Again after 50% DA merger Basic as on 1.1.2018 15750x 1.5 = 23625

    As per 7 CPC Basic is 18000 New DA will be 2% in July-16
    3% in jan-2017.
    another 5 to 6% in July 2017 & Jan 2018. Total DA will be 10%
    As per 7 CPC Basic 18000+ 2 nos Increament Max Rs.1200=19200
    Total Salary as on 1.1.2018 is 19200+10% DA -1920 or say 2000 =21200. As Per 6 CPC it will be 23625.
    Then which will be Beneficial . Let us propose to Govt for a option who will not avail 7 CPC he will be allowed the 6 CPC with 50 % DA merger whenever it is Due.

    We don’t want 7 CPC. Your all above formula are welcome . But You Give this 2 alternate proposal to the Govt.
    We Want 6 CPC with all old allowances & Old 6 CPC DA & 50% DA Merger in the right time.

    Your salary has grown only by 0.2% since 2008

    China, Indonesia and Mexico had the largest real salary growth at 10.6%, 9.3% and 8.9%, respectively

    India has seen a salary growth of just 0.2 per cent since the great recession eight years back, while China recorded the largest real salary growth of 10.6 per cent during the period under review, says a report.

    According to a new analysis by the Hay Group division of Korn Ferry, India’s salary growth stood at 0.2 per cent in real terms, with a GDP gain of 63.8 per cent over the same period.

    During the period under review, China, Indonesia and Mexico had the largest real salary growth at 10.6 per cent, 9.3 per cent and 8.9 per cent, respectively.

    Meanwhile, some other emerging markets including Turkey, Argentina, Russia and Brazil had the worst real salary growth at (-) 34.4 per cent, (-) 18.6 per cent, (-) 17.1 per cent and (-) 15.3 per cent, respectively.

    “Most emerging G20 markets stood at either one end of the scale or the other either amongst the highest for wage growth, or amongst the lowest. However, India stood right in the middle, with all the mature markets,” the report said.

    The report further noted that Indian wage growth is the most unequal.

    “Of the countries we looked at, Indian wage growth was by far the most unequal – people at the bottom are 30 per cent worse off in real terms since the start of the recession; whilst people at the top are 30 per cent better off,” Benjamin Frost, Korn Ferry Hay Group Global Product Manager – Pay said.

    Strong wage growth for senior jobs is mostly because of skill shortages for key professional and managerial roles; and the increasing connection to a more globalised pay market at the senior levels – a market where India still pays less than most countries, but is catching up fast, Frost said.

    Regarding the poorer wage growth at the bottom, the report noted that it is more because of an oversupply of people.

    “India has made less progress than some other countries in bringing high value jobs to the country. This has led to poor job growth, therefore an oversupply of un/semi-skilled people, and poor wage growth,” Frost said.

    Globally, the United States suffered one of the worst salary recoveries among developed nations. Adjusted for inflation, salaries in the United States decreased 3.1 per cent on average since September 2008 – despite a Gross Domestic Product (GDP) growth of 10.2 per cent.

    Canada’s salary recovery is the best among developed nations, with a 7.2 per cent salary growth on average, with a GDP gain of 11.2 per cent.

    Other developed nations experienced flat to modest salary growth, with Australia at 5.9 per cent, France at 5.2 per cent, Germany at 5 per cent and Italy at 2.4 per cent.

    “While overall, global economists point to this recovery as one of the worst in history, there are political, economic and social reasons for the disparate salary fluctuations in different countries,” Frost said.

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