Seventh Pay Commission – The Real Salary Hike?

The cabinet passed the Seventh Pay Commission report recommendations yesterday. The entire media including news channels, newspaper screamed how “Acche Din” has arrived for Central Government Employees. Even Finance minister thinks “Government salaries now distinctively higher than private sector”.  And it seems true if you see what most channels/newspapers are flashing.

The new pay scale is almost 2.5 times the existing one and then news arrived that Government employees were not happy with the above rise and would be protesting from July 11. The non-government employees were jealous as they never saw doubling of salary in their life. And then a protest – that was too much!

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Unfortunately the channels are just showing the half truth. The salary structure of government employees has “Dearness Allowance” (DA) as a component. This DA is adjusted automatically every year twice (January and July) in keeping with the inflation rate. When new pay commission salary comes in force the DA is reset to zero. As of today the DA is approximately 125% of basic. All other perks and allowances are linked to sum of Basic Pay and Dearness Allowance.

Here is the real salary increment situation:

As you can see the real increment in basic pay is 14.3% to 25% and not more than double as everyone else understands. If you add perks and allowances (which is still to be finalized) the total increment would be in the above range as most of these are linked to basic pay and DA.

Why are Government Employees not Happy?

As per the reports the salary hike proposed by seventh pay commission is the minimum among all pay commissions till date. This has really irked the government employees. The truth is last few years have been bad for general economy and hikes in private companies have reduced substantially. I think this slowly and steadily have impacted the salary hikes for government sector too.

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Also when compared to private sector the government salary is higher for lower level employees and so we see so many PHDs and Master degree holder applying for the job of sweeper/peons.

We are no experts in commenting if the new salary is right or wrong. But in coming days expect more protest from different employee unions and negotiations by government.