Recompute 7th CPC Minimum Pay & Multiplication
Factor - Anomaly in computation of Minimum Wage: Agenda Item
for NAC Meeting
Item No 1
Anomaly in computation of Minimum Wage
In
Para 1.29 of Chapter 1 of the 7th CPC report, the learned
Chairman of
the Commission Justice Shri AK Mathur has approvingly quoted
the
following observation their Lordship in the Supreme Court in
the case of
Bhupendranath Hazarika and Another Vs. State of Assam (SC
2013 (2)
Sec.516)
"........ It should always be borne in mind that
legitimate aspirations of the employees are not guillotined
and a
situation is not created where hopes end in despair. Hope for
everyone
is gloriously precious and that a model employer should not
convert it
to be deceitful and treacherous by playing a game of chess
with their
seniority. A sense of calm sensibility and concerned
sincerity should be
reflected in every step. An atmosphere of trust has to
prevail and when
the employees are absolutely sure that their trust shall not
be
betrayed and they shall be treated with dignified fairness
then only the
concept of good governance can be concertized. We say no
more."
Naturally
the recommendations of the 7th CPC ought to have been in
consonance
with the spirit of the observations made in Para 1.29, While
determining
the Minimum Pay (Chapter 4.2). The Commission is on record
to state
that it shall abide by the formula of Dr WR Aykroyd as
amended by
Supreme Court in the case of Workmen represented by Secretary
Vs.
Management of Reptakos Brett and Co. Ltd and Anr. on 31st
October, 1991
(Equivalent citations: 1992 AIR 504, 1991 SCR Supl. (2) 129).
In its
submissions made to the Govt, the Staff Side had pointed out
the errors
and omissions crept in the computation of Minimum wage and
its
consequential impact. The Commission’s recommendations in
this regard
was clearly in violation of what has been stated in para 1.29
(quoted
above). We annex for ready reference the extracts from our
own
submissions pertaining to this issue.
Our submission to Cabinet Secretary on 7th
CPC:
"We
are not in agreement with the methodology adopted by the 7th
CPC in
computing the minimum WAGE. We give hereunder briefly the
reasons
thereof.
The retail prices of the commodities quoted by the Labour
bureau is irrational, imaginary and even absurd in respect
of certain
articles at certain places. The Staff Side had objected to
the adoption
of those rates in its meeting with the Commission on 9th
June, 2015.
The
adoption of 12 monthly average of the retail prices is
contrary to Dr.
Aykroyd formula. Same is the case with the reduction effected
by the
Commission on housing and social obligation factors. The
house rent
allowance is not a full compensation of the expenditure
incurred by an
employee for obtaining an accommodation. Therefore, no
reduction on that
count in arriving at the minimum wage is permissible. We may
cite the
minimum wage computation made by the 3rd CPC in this regard.
The
employees were in receipt of HRA even at that time. But still
the 3rd
CPC, and rightly so, adopted the 7.5% as the factor for
housing. In
respect of the addition to be made for children education and
social
obligation as per the Supreme Court judgement, (25%) the
Commission has
reduced the percentage to 15% on the specious plea that the
employees
are separately given children education allowance. The
Children
education allowance is not a full reimbursement of the
expenses one has
to incur. After the liberalization of the Education Sector
where private
parties were allowed to set up universities and colleges,
the expenses
for education had increased heavily. No concession or
allowance is
granted to the employees for educating the children beyond
the higher
secondary levels. The earlier Pay Commission has only tried
to
compensate a little in the increasing cost of education and
that too at
the primary level, since even the Governmental institutions
had started
charging abnormal tuition and other fees.
The website maintained
for the Agriculture Ministry depicts the retail prices of
commodities
which go into the basket of minimum wage computation. Even
though the
rates quoted by them vary from the real retail prices in the
market, it
provides a different picture. If one is to take the rates
quoted by them
for different cities and make an all India average of the
prices as on
1.7.2015, it will work out to Rs. 10810. It will result in
the
computation of the minimum wage of Rs. 19880. Adding 25% for
arriving at
the MTS scale, it will rise to Rs. 24850. To convert the
same as on
1.1.2016, 3% will be added as suggested by the 7th CPC. The
final
computation will be Rs. 25,596, when rounded off shall be Rs.
26000.
The
Andhra Pradesh State Pay Commission in its report has taken
the
commodity prices at Rs. 9830,- as on 1.7.2013 which works out
to a
minimum wage of Rs. 18080. The wage of MTS will then be Rs.
22600 as on
1.7.2013. The Corresponding figure for 1.1.2016 shall be Rs.
26758,
rounded off to Rs. 27000.
The Staff side had computed the minimum
wage as on 1.1.2014 at Rs. 26,000, taking the commodity price
at Rs.
11344. The rates were taken on the basis of the actual retail
prices in
the market as on 1.1.2014 (average prices of 8 Cities in the
country)
substantiated by the documentary evidence of Cash bill
obtained from the
concerned vendors. As on 1.12016, the minimum wage work out
to Rs.
29339, rounded off to Rs. 30,000.
The 5th CPC adopted the rate of
growth in the economy (as reflected in the increase in the
per capita
net national produce at factor cost) over a period of ten
years to
arrive at the increase required to be made to arrive at the
minimum
wage. The per capita NNP at factor cost registered an
increase of 65.28%
over a period of ten years in 2013-14. If we apply the same
percentage
to the emoluments (Pay +DA) as on 1.1.2016 (assuming that DA
will be
125% as on that date), the minimum wage as on 1.1.2016 for an
MTS will
have to be Rs. 26030, rounded off to Rs. 27000.
In para 4.2.9 of
the report, the Commission has given a table depicting the
percentage
increase provided by the successive Pay Commissions,
according to which
the 2nd CPC had made a paltry increase of 14.2%. The 3rd CPC
gave a rise
of 20.6, 4th 27.6, 5th 31.0 and 6th CPC 54%. While the per
centage
increase had been in ascending order all along, the 7th CPC
has sought
to reverse that trend ostensibly for reasons unknown. It was
the meager
increase of 14% provided for by the 2nd CPC that triggered
the volatile
situation in the civil service and led to all India strike
encompassing
all employees which lasted for 5 days in 1960.
In the case of
Bank, Insurance and many other Public Sector Undertakings
wage revision
takes place once in 5 years. In the recently concluded
agreement, Bank
employees were provided more than 15% increase.
After the
implementation of the Pay Commission Report the AP State
Employees have
been given a wage structure based on a minimum wage for above
the level
of Central Government employees. In their case also wage
revision does
take place once in 5 years.
It could be seen from the above that
the computation of minimum wage by the 7 CPC is prima facie
wrong and
computed on untenable premises and incorrect data. The
minimum wage
therefore requires re-computation and revision. Once the
minimum wage
gets revised, the fitment formula, the multiplication factor
applied for
determining the pay levels and the pay matrix itself will
have to be
consequently revised."
It could be seen from the above extract
that the Minimum Wage as on 1.1.2016 could not have been
computed at
less than Rs 26000/- and consequently the multiplication
factor ought to
have been at 3.714. It is, therefore, demanded that the
Minimum Wage
and multiplication factor may be recomputed and Pay Level and
Pay matrix
changed in accordance with the revised minimum wage.
