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Comments & Suggestions on Draft Memo of JCM to 7th CPC

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Comments of IRTSA on Draft Memo of JCM to 7th CPC on following points scroll below to view details:-

  1. NEED BASED MINIMUM WAGE
  2. Wage revision based on Rise of NNP
  3. Corrections may be made in the Table 5.2 of the JCM Memo
  4. Serious disadvantage of the proposal on the ratio of 1:8 between Minimum & Maximum
  5. Advantages & Disadvantages of Grade Pay & Pay Band System
  6. Fitment Forumula
  7. Fixation of Pay on Promotion
  8. Date of Effect
  9. Transport Allowance
  10. Additional Points for JCM Memorandum

Click here to view Corrected version of Draft of JCM’s Memorandum to be submitted to 7th CPC

COMMENTS & SUGGESTIONS
ON DRAFT MEMO OF JCM STAFF SIDE TO 7TH CPC
– FOR CONSIDERATION OF THE JCM STAFF SIDE
1. NEED BASED MINIMUM WAGE:
Need Based Minimum Wage works out to be Rs.25,813 (not Rs.20,856/- as mentioned in Draft Memorandum).

Attention is invited towards the following Judgment of Supreme Court in this regard – as referred to by the Fifth Pay Commission in Para 41.7 of their Report:
Supreme Court, in 1991, in a Judgment (in the case Raptakos Brett and Co. versus others) opined that the criteria recommended by the Indian Labour Conference, 1957 may not suffice. It held that an additional component of Children’s Education, Medical Requirements, Recreations including Festivals / Ceremonies and provisions for old age and Marriage should constitute 25% of minimum wages.
Detailed calculations of Need Based Minimum Wage as per above said Judgment of Supreme Court are given below. It is requested that the same may please be considered by JCM Staff Side for affecting relevant changes in its Memorandum to 7th CPC.
CALCULATION OF NEED BASED MINIMUM WAGE PER MONTH (AS PER 15TH LABOUR CONFERENCE & SUPREME COURT JUDGEMENT (CITED ABOVE)
i) Cost of minimum requirement of food per person per day:
Cost of minimum requirement of food per person per day works out to be Rs.125.00 as per Dr. Aykroyd’s formula for an average Indian adult of moderate activity
Minimum need of food & its Cost per person per day
Items Rate/Unit Price
Milk (regular), (0.3 liter) Rs.30/lit Rs.9.00
Loaf of Fresh White Bread (100.00 g) Rs.50/Kg Rs.5.00
Rice (white), (250g) Rs.40/Kg Rs.10.00
Egg(1) (or equivalent intake of Veg food) Rs.4.00 Rs.4.00
Oil/ Cheese (30g) Rs.200/kg Rs.6.00
Meat (50g) (or equivalent intake of Veg food) Rs.250/kg Rs.12.50
Dal (100g kg) Rs.160/kg Rs.16.00
Fruits (250g kg) Rs.80/kg Rs.20.00
Vegetables (250g) Rs.50/kg Rs.12.50
Others Rs.15.00
Fuel Rs.15.00
Total expenditure for Food per person per day Rs.125.00
NEED BASED MINIMUM WAGE PER MONTH
As per 15th Labour Conference, Supreme Court Judgment of 1991

SL
NO		 HEAD OF EXPENDITURE NEED BASED
MINIMUM WAGE
1 Cost Of Food (for 4 Members per family) (Average of 365 days per annum @ Rs.125, per day per head ) Rs.15,208
2 Clothing Rs. 2,000
Sub Total Rs.17,208
3 Miscellaneous Expenditure ( 20% of Total ) Rs.3,442
Total Rs.20,650
4 Children’s’ Education ,Social Needs etc.,
( 25% of Total )(As per Supreme Court Judgment)		 Rs.5163
Grand Total Rs.25,813

2. Wage revision based on Rise of NNP:

It would be better to delete the Para reg. Wage revision based on Rise of NNP in the Memorandum than to say that the Minimum Wage based on rise of NNP (for 8 years ) works out to be Rs.22857 and then ask for the Minimum Wage of Rs.26000 just on the ground that the “Government has presently the capacity to pay” (as mentioned in the very next Para thereof in Chapter V of the JCM Memo).

We must first justify Rs.26000 before talking about the capacity of the Govt. to pay.

Following points in this regard may please be considered:

i) We should calculate Minimum Wage based on Rise of NNP in 10 years for which figures are available – even if we ask for DOE as 1-1-2014.

Year Per Capita NNP at factor cost At constant price Increase over previous year
2003-04 22985 1407
2004-05 24143 1158
2005-06 26015 1872
2006-07 28067 2052
2007-08 30332 2265
2008-09 31754 1422
2009-10 33901 2147
2010-11 36342 2441
2011-12 38037 1695
2012-13 39168 1131
ii) % Increase of NNP at factor cost on Constant Prices for the period of ten years between the year 2003-04 and 2012-13 70.4%

iii) Consider DA Merger to calculate Minmum Wage: In case it is still decided to base it on rise of NNP for 8 years, then, Revised Minimum Wage Based on Rise of NNP should be asked for with Merger of 50 % DA (which is one of our main demands).

Minimum Revised Pay – Based on Rise of NNP in 8 year & Merger of 50% DA

Proposed Minimum & Maximum Salary w.e.f. 1.1.2014
Based on Rise of NNP at Constant Price between 1.1.2006 to 1.1.2014
(As per formula adopted by Fifth Pay Commission for determining Common Multiple Factor)
Minimum Basic pay after VI CPC Rs.7000
Dearness pay by merging 50% of DA Rs.3500
Basic Pay along with DP 10,500
DA 50% (as on 1.1.2014) Rs.5250
BP+DA Rs.15,750
Compensation factor 57.55% of BP(as per rise of NNP ) Rs.9,064
Minimum Revised Pay Rs.24,814 or say Rs. 25000
Proposed Common Multiple Factor (Number of times
increase of BP or Compensation Factor)		 3.54
Maximum Revised Pay (80000 X 3.54) (Based on the Rise of NNP for 8 years) Rs. 283200 or say Rs. 2.80,000

NOTE: Please see Para 4 of these Comments – reg. Ratio of Minimum & Maximum

iv) It will be financially much more beneficial for the employees to ask for a revision based on Rise of NNP in 10 years (than in 8 years) as that will also result in improved Common Multiplication factor in NNP

v) Calculations based on Rise of NNP for 10 years from 2005-06 to 2014-15 (as per formula adopted by Fifth Pay Commission) are

vi) given below for ready reference; and adoption if deemed fit:

Year Per Capita NNP at factor cost At constant price Increase over previous year
2004-05 24143
2005-06 26015 1872
2006-07 28067 2052
2007-08 30332 2265
2008-09 31754 1422
2009-10 33901 2147
2010-11 36342 2441
2011-12 38037 1695
2012-13 39168 1131
2013-14* 41046 1878
2014-15* 42924 1878
% Increase of NNP at factor cost on Constant Prices for the period of ten years

3. Following corrections may be made in the Table 5.2 of the JCM Memo (if it is to be retained – ignoring all the above suggestions) 

57.55% of Rs.14,000 is Rs.8057 only and the wage to be fixed as on 1.1.14 will be Rs.22057 as marked in green colour.

A. Per Capita NNP at constant price for 2004‐05 Rs. 24,143
B. Per capita NNP at constant price for 2011‐12 Rs. 38,037
C. The increase registered over 8 years. Rs. 13,894.
D. Percentage increase over 2004‐05 57.54877 %
E. Emoluments as on 1.1.2014 Rs. 14,000
F. 57.55% of Rs. 14,000. Rs. 8,857. Rs.8057
G. Wage to be fixed as on 1.1.14. Rs. 22857. Rs.22057

4. MOST IMPORTANT

SERIOUS DISADVANTAGE OF THE PROPOSAL ON THE RATIO OF 1:8 BETWEEN MINIMUM & MAXIMUM

IT WILL SUPRESS ALL THE INTERMEDIATE GRADES.

Following points be seriously considered:

  • Minimum salary demanded = Rs.26000/7000 = 3.71 times rise. 
  • Maximum salary demanded = Rs.2,10,000/80,000 = 2.63 times
  • All the intermediate scales have to be accommodated within the proposed Rs.26,000 and Rs.2,10,000.
  • Therefore, intermediate scales will not get the hike of 3.71 times.
  • The hike of intermediate scales will get reduced progressively from 3.71 to reach 2.63 times.

Following Table will further illustrate the above points:

  • For 20 pay scales, between the proposed minimum and maximum the hike will get reduced gradually as given in the table below
Proposed Scale Hike – No. of times
S1 3.71
S2 3.65
S3 3.60
S4 3.54
S5 3.48
S6 3.43
S7 3.37
S8 3.31
S9 3.25
S10 3.20
S11 3.14
S12 3.08
S13 3.03
S14 2.97
S15 2.91
S16 2.86
S17 2.80
S18 2.74
S19 2.68
S20 2.63

This will deprive all the intermediate scales the hike of 3.71 times.

It is suggested NO ratio be proposed between minimum and maximum.

OR ELSE

MAXIMUM PAY BE DECIDED FIRST AS PER RISE OF NNP

AND THE DESIRED RATIO BE THEN APPLIED TO DETERMINE THE MINIMUM.

5. ADVANTAGES & DISADVANTAGES OF GRADE PAY & PAY BAND SYSTEM

A) Advantages of PB & GP System
i) Problem of stagnation in pay is eliminated, since pay bands are having long span. Further, if employees are stagnated at the maximum of any pay band for more than one year continuously shall be placed in the immediate next higher pay band without change in the Grade Pay.
ii) During the implementation of Sixth Central Pay Commission recommendations, point to point fixation had been automatically felicitated by the pay band system, avoiding the bunching of basic pay (one increment in the revised pay scale for every three increments in the pre-revised scale) which had put employees with more years of service in a disadvantageous position.
iii) Anomalies of Pay fixation at the time of promotion, implementation of Pay Commission recommendations, implementation of Cadre Restructure order, etc has been eliminated to large extend, since only Difference in Grade Pay & one additional increment (even though inadequate) has to be given during the promotion.
iv) The problem of Junior getting more pay will not arise.
v) Quantum of increment increases exponentially, instead of fixed rate of increment attached to every pay scale.
vi) Grade Pay decides hierarchy / seniority of the post.
vii) Any further introduction / extension of specific benefits like incentive / special pay can be paid as a distinct component as a supplement to the Pay Band & Grade Pay.
B) Disadvantages of PB & GP System – which need to be addressed
i) Rate of annual increment (3% of basic pay) is inadequate.
ii) Increment during promotion (difference in grade pay + one additional increment) is inadequate.
iii) Increase between minimum basic pay of pre-revised scale and minimum of every Pay Band is not uniform, more increase in favour of PB-3 & PB-4.

Pay Band Minimum of V CPC scale Minimum of pay band No. of times increase
1 2 3 4 = 3 / 2
-1S 2550 4440 1.74
PB-1 2750 5200 1.89
PB-2 5000 9300 1.86
PB-3 8000 15600 1.95
PB-4 14300 37400 2.62

iv) Senior promotes getting less pay than Junior direct recruits, is common – in violation of basic principle of Pay Band system. For example,
a) JE with five years of service while getting regular promotion from Grade Pay Rs.4200 in PB-2 to Grade Pay Rs.4600 as SSE gets fixed a Basic pay of Rs. 16120 compared to the Direct recruit basic pay of Rs.17140.
b) JE with five years of service while getting promotion (through LDCE) from Grade Pay Rs.4200 in PB-2 to Grade Pay Rs.4800 as AWM/AME/AE gets fixed at a Basic pay of Rs. 16120 compared to the Direct recruit basic pay of Rs.18150.
c) Pay on Promotion should be fixed at least at par with Entry Pay in the Revised Pay Structure for direct recruits.

6. FITMENT FORMULA

Sixth CPC’s pay band system and fixation formula has eliminated the theory of employees with less years of service getting fixed more pay or in advantageous position than the employees with more years of service. This was possible because of the tables given by 6th CPC for point to point fixation.

7. FIXATION OF PAY ON PROMOTION

Fixation of pay on shall be asked straight in terms of percentage of the basic pay being drawn at the time of promotion and it should not be less than 10% of basic pay drawn at the time of promotion.

8. DATE OF EFFECT

It is very much doubtful that Government will deviate from the practice of Revising the Wages after 10 years It will not agree to implement the 7th CPC recommendations after completion of only 8 years since 6th CPC.

9. TRANSPORT ALLOWANCE

Transport allowance may be demanded equally for all Classes of Cities from 10 to 15 % of Pay plus DA, since the primary component of expense, ie. Fuel’s price is almost uniform throughout the country.
In any case, Transport Allowance for Z Class cities should also be demanded at appropriate rates.
Some additional points for the Memorandum are being compiled and shall be sent by the evening today for the consideration of the JCM Staff Side. [Click here to view]

Harchandan Singh

Source: http://www.irtsa.net/pdfdocs/Comments_on_Draft_Memo_of_JCM_to_7th_CPC.pdf

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