7th Pay Commission – How minimum and maximum salaries have been fixed

From time to time, the Centre appoints pay commissions for examining various aspects of the compensation package of central government employees and recommend appropriate pay revisions. So far, seven central pay commissions have been appointed.

The first was constituted in 1946, followed by commissions appointed in 1957, 1970, 1983, 1994, 2006 and 2014. These commissions are the successors of Royal commissions set up during the British raj. The gap between two pay commissions has been about a dozen years, but the last pay commission was appointed within a space of eight years.

What factors are examined in fixing salaries of government employees?

The seventh pay commission report states that the salaries of government employees should be enough to motivate them to work as well as retain them in government service as the recruitment and training process of new employees is an expensive affair. Another important basis, is equity or equal pay for equal work.

How is the minimum salary fixed?

The estimation of minimum pay in government is the first step towards building a new pay structure. It is fixed by considering the recommendations of the 15th Labour Conference held in 1957. The need-based wages are fixed to cover all the needs of a worker’s family.One key measure is food requirements as specified by the recommendations of Dr Wallace Akroyd’s formula providing a minimum of 2,700 calories and a specified quanitity of protein, fat and so on.

The normative family is taken to consist of a spouse and two children below the age of 14. With the husband assigned one unit, wife 0.8 units and the two children 0.6 units each, the minimum wage needs to be enough to provide for three consumption units. It also keeps in mind the 1991 judgment of the Supreme Court asking for providing for education, medical expenses, recreation, festivals and ceremonies. Based on these criteria, the minimum wage fixed by the seventh pay commission is Rs 18,000.

How are higher level salaries fixed?

The pay matrix has two dimensions hor izontal and vertical.

There are 18 horizon tal levels for starting points in various government jobs and then there are verti cal ranges of pay progression for each of these levels.An employee joins at a particular level and progresses within the level as per the vertical range. The movement is usually on an annual basis, based on annual increments till the time of their next promotion. Different compensations are fixed for all these stages.

In the first pay commission, there was a huge difference between the highest and the lowest paid government employees. For instance in 1948, the salary of the highest paid government official was Rs 2,000 which was 37 times higher than the Rs 55 paid to the lowest earning employee. The ratio was progressively reduced to reach 10.2 times by the fifth pay commission. In the seventh pay commission stands at 13.9

Source: Economics Times