No.NC4JCM/2O14/VII CPC
Dated: June 3, 2014
Justice Shri Ashok Kumar Mathur,
Chairman,
Seventh Central Pay Commission,
New Delhi
Dear Sir
Sub: Memorandum to VII CPC on merger of DA with Pay and Interim Relief
As was decided in the Preliminary Discussion Meeting, held on 28”‘ May,
2014, with the VII CPC, we submit herewith Memorandum on Merger of Dearness
Allowance with Pay and Interim Relief, on behalf of Staff Side, National
Council(JCM).
Yours faithfully,
sd/-
(Shiva Gopal Mishra)
Memorandum to VII CPC on merger of DA with Pay and Interim
Relief
National
Council (Staff Side)
Joint
Consultative Machinery
for Central Government Employees
13-C, Ferozshah Road, New Delhi – 110001
Shiva Gopal Mishra
General Secretary
No.NC4JCM/2O14/VII CPC
Dated:
June 3, 2014
Justice Shri Ashok Kumar Mathur,
Chairman,
Seventh Central Pay Commission,
New Delhi
Dear Sir
Sub: Memorandum to VII CPC on merger
of DA with Pay and Interim Relief
As was decided in the Preliminary
Discussion Meeting, held on 28”‘ May, 2014, with the VII CPC, we submit
herewith Memorandum on Merger of Dearness Allowance with Pay and Interim
Relief, on behalf of Staff Side, National Council(JCM).
Yours
faithfully,
sd/-
(Shiva Gopal Mishra)
Copy to: Ms Meena Agarwal,
Secretary, Seventh Central Pay Commission (Government of India), New Delhi,
along with a copy of above cited memorandum.
Encl: As above
Copy to: All Constituent
Organizations of the NC/JCM(Staff Side), along with a copy of above cited
memorandum.
Encl: As above
MEMORANDUM ON MERGER OF DA WITH PAY AND INTERIM
RELIEF.
We
solicit the kind reference of the 7th Central Pay Commission to the discussion
during the informal interaction the staff side of the National Council had with
the Commission on 28.5.2014, when we inter alia raised the issue of merger of
Dearness allowance and Interim Relief.
2.
Before we dwell upon the issues, it may not be out of place to refer to the
evolution of the JCM which later became the negotiating platform for the
entirety of Central Government employees and workers It was conceived to bring
about a conflict free industrial climate in Civil Service in the wake of the
tumultuous experience of an industrial strike action in 1960. The National
Council, the apex forum under the three tier system headed by the Cabinet
Secretary was empowered to deliberate upon the common issues of the Central
Government employees. The Staff Side, National Council, thus became the united
voice of the entirety of the Central Government employees on fundamental issues
like Wages, Pay Scales, Rate of increment, Dearness compensation and other
general allowances.
3.
However, over the years, JCM became an ineffective instrument to address the
basic issues and demands of the employees. We shall detail the requirements to
empower and streamline the functioning of the JCM as a negotiating forum in our
Main Memorandum to the Commission.
4.
The twin issues viz. Merger of DA and Interim relief had been the subject
matter of discussion with the Government when the Staff side was called upon to
present their views in the matter of finalization of the terms of reference for
the 7th CPC by the Secretary, Personnel, (Department of Personnel and Training)
in his capacity as Chairman, Standing Committee, National Council JCM. Though
we pleaded for the specific reference of the above two issues, to the 7th CPC,
the final 1 version of the terms of reference approved by the Government did
not find a place for our views. We have, therefore, been constrained to take
recourse to clause 5 in the terms of reference, which enables the Commission to
send interim report to the Government.
MERGER OF DA WITH PAY:
5.
Dearness allowance is considered as a device to protect, to a greater or lesser
extent, the real income of wage earners and salaried employees from the effects
of rise in prices. As per the vagaries of price fluctuation in the market, the
allowances are bound to go up and down. Constant rise in the price level, might
bring about a situation whereby the quantum of allowance shall go up. Such a
phenomenon of constant increase of prices of commodities gave rise to the
demand for merger of Dearness allowances with pay so as to make it pay, rather
than an allowance, with all concomitant benefits. A committee to advice the
Govt. on the portion of such DA to be treated as pay was appointed on 15th
July, 1952 (Resolution No. F6(6)E-II/52). The terms of reference of the
Committee was :
“Taking
in to consideration the rates of dearness allowance that have been sanctioned
to date for Central Govt. servents, and the level at which cost of living index
are likely to stabilize in the foreseable future, to recommend the percentage
of dearness allowance now given to the Central Govt. servents which should be
allowed to be treated as pay for all purposes in future, provided that by doing
so the present total pay and dearness allowance is not enhanced:”
6.
The said committee was headed by Shri N.V. Gadgil, Member of Parliament. The
Committee in its report concluded that
“We
have recorded the various reasons which we have taken into account in arriving
at the conclusion that the appropriate level below which the All India cost of
living index is not likely to fall, should be taken as 265-284. We find that
for the index figure of 265, the Central Pay Commission formula allows Govt.
Employees in the lowest pay group a dearness allowance of Rs.20/- and this
amount remain unchanged until the cost of living index go above the index of
the next level i.e. 285. We, therefore, consider that the employees in this pay
group, a sum of Rs. 20/- which represents 50% of the present dearness allowance
of Rs. 40 per month should be treated as pay (page 22 chapter V Report of the
Dearness allowance Committee).”
7. The Committee also enumerated in
their report the purposes for which the DA shall be treated as pay as under:-
Retirement Benefits
Travelling allowance
Compensatory allowance
House rent allowance
Compensation of Leave Salary etc.
8.
The 3rd CPC, whose recommendations were implemented with effect from 1.1.1973
had no reference from the Govt. on the question of merger of DA. Still while
dealing with the issue of Dearness allowance (vol.IV – Page 1 Ch.55) the
Commission noted that “no other country in the world (except Ceylon and
Pakistan) seems to be following the practice of paying dearness allowance or
cost of living allowance as a separate element of wage. In most of the
countries compensation to Govt. employees for the increase in the price level
is given by way of periodical salary revisions Prior to the setting up of the
3rd CPC, pursuant to the discussion in the National Council, JCM, the entire
dearness allowance as on 1.8.1966 was treated as Dearness pay and the
consequent increase in allowance was granted by the Government with effect from
1.12.1968. In para 16, the Commission recommended that should the price level
rise above twelve monthly index of 272 ( 1960=100) the Government should review
the position and decide whether the Dearness allowance Scheme should be
extended further or the pay scale themselves should be revised. ( Page 4
Chapter 55. Vol. 4 3 rd CPC report). On crossing the index point of 272, the
Government conceded the demand for merger of 36% of DA with pay. Later, based
on an agreement reached at the National Council JCM the DA granted upto the
index level of 320 points i.e. 60% of the Basic Pay was merged through
executive instructions for purpose of allowances and pension. Before the 4th
CPC was set up in 1983, the issue of further merger of DA with Pay was raised
by the employees. Conceding the demand the Government decided that DA entitled
to be drawn upto the index average of 568 points be treated as pay for all
purposes.
9.
Since the Pay Scales were to be constructed with reference to the consumer
price index as on the date of revision, every Commission had to perforce merge
the entire DA when the actual revision was made. The DA on such revised pay is
to be computed on the basis of annual average rise of index after every six
months interval. Therefore, the question of merger of DA again rose at the time
of negotiation with the Government for setting up the 5th CPC. An agreement was
reached on merger of certain percentage of DA and interim relief. (Rs. 100/-)
in September, 1993. In April, 1994, the Government issued notification setting
up the 5 th CPC (resolution No. 5(12)E-III/93 dated 9.4.1994).
10.
The Staff Side placed before the 5th CPC the necessity to merge DA with Pay at
an index level below which prices were not likely to move downwards. Pointing
out that in the last two decades i.e. 1980s and 1990s there had been not a
single occasion when the annual average index had fallen consequent upon which
the DA rates were to be reduced, they requested the Commission to merge the
entire DA which had been at 97% of the Basic pay as on 1.7. 1993. (The AICPI
index being 1201.66). The Commission after deliberations on the memorandum and
discussion with the staff Side, recommended that 97% of Basic Pay as DA
admissible from. 1.7. 1993 be treated as Pay for all purposes. However, they
suggested that the said merger might be given effect only from 1.4. 1995.
11.The
5th CPC submitted its final report to the Government on 19th January, 1997.
Before the Commission, the Staff side had demanded that as and when the
consumer price index exceeds 25% of the base index at which the pay is fixed
that proportion of Dearness allowance should be treated as Pay for all purposes
and the decision on this must not be left at the discretion of the Government.
The Commission considering this demand observed that:
“From
the past trend of CPI given in annexure 11’8.1 it is observed that 50% increase
in prices generally takes around five years to materialise. A mid-term
quinquennial revision of salaries of the Government employees is not something
the Government should grudge. In view of the above, we recommend that DA should
be converted into Dearness Pay each time the CPI increases by 50% over the base
index used by the last Pay Commission. Such DA should be termed as Dearness Pay
and be counted for all purposes including retirement benefits. (Chapter 105
page 157)”. The 5th CPC thus regularised the periodical merger of DA into a
well thought 11. out scheme. They also established that wage revision is needed
either when the DA exceeds 50% over the base index or after five years .
12.
The Government, however, did not act upon this recommendation, when the
percentage of DA exceeded 50( 52%) as on 1.7.2002, though it had accepted the
recommendation in 1997. With the persistent persuasion, ultimately, the
Government issued orders treating 50% DA as Dearness Pay for all purposes with
effect from.1.4.2004.
13.
Even though the 5th CPC had brought about a finality on the approach to the
question of merger of DA with pay, the 6th CPC reopened the issue afresh. The
Commission made the following observation-
“This
conversion (merger of DA with Pay) is however not necessary in the revised
structure being recommended where increments are payable as a percentage of Pay
in the Pay Band and Grade Pay thereon and provision has been made for all allowances/benefits
to be revised periodically, linked to the increase in the price index. The
Commission is, therefore, not recommending merger of DA with Basic pay at any
stage.”
14.
The 3rd, 4th and 5th Central Pay Commissions had approvingly endorsed the recommendations
made by Gadgil Committee in 1952. The practice of periodical merger had been
followed as a device to protect the erosion in the real value of wages
(including allowances) especially at the lowest level of employees. This
erosion becomes unbearable when DA crosses over 50%. To say that the increment
rate which is presently 3% of pay would take care of the erosion is to say the
least, atrocious. Increment is granted as a legitimate reward for the service
rendered by an employee for a year. It has nothing to do with the erosion in
the real value of wages. No doubt, the 6th CPC has recommended that a few
allowances should be revised by 25% as and when the DA crosses over the
stipulated 50%. Such allowances are very in number. Moreover, 25% rise as a
compensation when the DA itself rises to 50% is arbitrary and conceived to
compensate the worker with lesser amount than what he is entitled to.
15.
We, therefore, strongly plead before the Commission, for the reasons enumerated
in the foregoing paras, that the Dearness allowance as on 1.1.2014 which stood
at 100% may be recommended to be merged and treated as Dearness Pay for grant
of all benefits, allowances, pension and other retirement entitlements.
16.
We further submit that Merger of D.A. as on 1.1.2014 may also be recommended in
respect of pensioners and Gramin Dak Sewaks of Postal Departments.
INTERIM
RELIEF.
Barring
the 6th Central Pay Commission, all other Commissions had recommended grant of
Interim Relief to the Central Government Employees. As per the 5thCPC, Interim
relief represented a provisional arrangement during the period between setting
up of a Pay Commission and submission of a report by the Commission and its
acceptance by the Government. Most of the earlier Commissions with the exception
of Ist and 6th Central Pay Commission had taken 2-3 years and sometimes more to
finalise their recommendations. Despite the specific reference made to the 6th
CPC, by the Government to consider grant of Interim Relief the Commission took
the position that having decided to submit its recommendation within the
stipulated period of eighteen months and having arrived at a view that its
recommendations must be effective from 1.1.2006, it shall not waste time on the
question of interim relief. What the 6th CPC failed to appreciate was the
erosion in the real value of wages that had taken place over the years due to
inflation and rise in prices of essential commodities and the inability
especially of the employees at the lower level to make the both ends meet with
the available wages. No doubt, the employees had been to some extent benefitted
by the decision of the Government to merge 50% Dearness allowance and treat it
as pay for all purposes including DA thereon.
2.
Every Pay Commission which had recommended Interim Relief had made it amply
clear that it was intended to provide some relief to the employees pending a
comprehensive determination of their salary structure and other benefits. The
relief granted was treated as sui generis (one of its own kind, unique) and it
was not taken into account for determining any allowance or benefit.
3.
We give below briefly the course of negotiation and approach of various earlier
Pay Commissions on the question of grant of interim relief.
4.
The Second Pay Commission gave a report within a month’s time and recommended
an Interim Relief of Rs. 5/-. The third pay Commission gave three instalments
of Interim Relief on varying rates. After appoint of the 4th CPC in July, 1983,
Government sanctioned (Vide Department of Expenditure O.M.No. 7(39)-E III/83
dated 2nd August, 1983) on their own initiative Interim Relief at varying rates
of Rs. 50 and Rs. 100 per month. In March, 1985, 4th CPC submitted a report and
granted a further interim relief at 10% of Basic pay subject to a minimum of
Rs. 50 per month. Again before the setting up of the 5th CPC, the Government
sanctioned Rs. 100 as interim Relief. As it was not considered adequate, the
staff side of the National Council, JCM submitted a memorandum to the 5th CPC
demanding additional interim relief. The Govt. vide their Department of
Expenditure, Resolution No. 5(12)EIII/93 dated 12.01.1995 amended the terms of
reference to enable the Commission to decide upon the additional interim
relief. The 5th Central Pay Commission in their interim report submitted on 2
nd May, 1995, recommended Interim Relief equal to 10% of Basic Pay subject to a
minimum of Rs. 100/-. The terms of reference of 6th CPC on the issue of Interim
Relief was as under:-
“2.g.
To examine desirability and need to sanction any interim relief till the time
the recommendations of the Commission are made and accepted by the Government”
5.
It has to be recalled that the Government did not initially refer the question
of Interim Relief to the 5th CPC but when the Staff Side submitted their
memorandum to the Commission on I.R., the Government had to amend the terms of
reference and refer the issue to the Commission for their decision.
6.
These go to establish the need for a relief in view of the erosion in the real
value of wages, the need to fill the widening gap in wages when compared to
outside rates and the fact that final recommendations of the 7 th Pay
Commission are bound to revise the wage structure and above all the need to
provide some relief to the employees who would retire before the Commission’s
recommendations are finally submitted to the Government and accepted by them.
7.
We give hereunder a table indicating the retail prices of the commodities which
goes into the computation of minimum wage as per Dr.Ackroyd formula as on
1.1.2006 (quoted by the 6th CPC in their report. Page 53. Table 2.1`.1 Chapter
2.2.) and the actual retail price of those very commodities as on 1.1.2011. The
percentage increase in the prices of each commodity is also given in the table.
The average rise in prices was of the order of 174%, whehreas the Dearness
allowance entitlement was only 51%.. The table clearly indicate the erosion in
the real value of the wages.
|
Sl.No
|
Name of articles
|
Price as on 1.1.2006
|
As on date
|
%increase
|
|
1
|
Rice
|
18
|
38
|
120
|
|
2
|
Dhall 4 varieties average
|
40
|
87
|
120
|
|
3
|
Raw vegetables
|
10
|
40
|
400
|
|
4
|
Green veg .
|
10
|
56
|
560
|
|
5
|
Other veg
|
10
|
40
|
400
|
|
6
|
Fruits
|
30
|
100
|
330
|
|
7
|
milk
|
24
|
32
|
40
|
|
8
|
Sugarjiggery Average
|
24
|
43
|
95
|
|
9
|
Edibleoil.3varieties.average
|
50
|
95
|
95
|
|
10
|
Fish
|
120
|
300
|
150
|
|
11
|
meat
|
120
|
240
|
100
|
|
12
|
egg
|
2
|
3
|
50
|
|
13
|
Detergents/soap
|
200
|
350
|
75
|
|
14
|
Cloth
|
80
|
120
|
50
|
|
Average increase :
|
174
|
8. The need based minimum wage
computed on the basis of Dr Ackroyd formula as on 1.1.2014 will be around Rs.
26,000 bringing about a gap of almost 12,000 at the level of an MTS. We shall
submit the details thereof in our main memorandum.
9. The only Public Sector
undertaking in which the wage agreement has been reached in 2013 is the Coal
India Limited. As per the said agreement, the minimum wage at the lowest level
of the worker as on 1.12014 is:
Basic Pay ——————————–Rs. 15, 712
Dearness allowance: ——-29.6%
Special allowance: ——— 4.0%
Special DA: ——————1.795%
Attendance bonus: ——-10%
Total: 49.395%————————– Rs. 7132.46
Total salary: —————————–Rs.22844.46
At the MTS level 22.844.46 x 130% —- Rs.29697.
10. As per the formula adopted by
the 5th CPC, the minimum wage will work out to Rs. 22,857 as under:
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 of an MTS as on 1.1.2014 – Rs. 14,000
F. 57.55% of Rs. 14,000. – Rs.
8,857.
G. Wage to be fixed in thecase of
MTS as on1.1.14. – Rs. 22857.
From
the above it is seen that Central Government employees presently have a very
depressed salary structure. The final outcome of the deliberations of the 7 th
CPC will become available only by 2016. It is, therefore, needed that the
employees have to be compensated in the form of Interim Relief. In our opinion
the Commission may, as has been done by the various earlier Pay Commissions,
recommend atleast 25% of Pay in Pay Band plus Grade Pay as Interim Relief
subject to a minimum of Rs. 4000/-. Incidentally we may point out that the
grant of interim relief will enable the Government to spread out the financial
outlay on account of wage revision over a period of more than three years.
We
further urge that the Commission may kindly recommended Interim Relief at the
above rate subject to minimum of Rs.2000/- to as pensioners and Gramin Dak
Sevaks of Postal Department.
SHIVA
GOPAL MISHRA
Secretary, Staff Side, National Council JCM.
Source:
http://ncjcmstaffside.com/wp-content/uploads/2014/06/Memorandum-for-IR-and-DA
