How to Calculate Minimum Pay for CG Employees?
How to Determine or Estimate Minimum Pay for Central Government Employees?
Determination of Minimum Pay in 7th Central Pay Commission…
The estimation of minimum pay in government is the first step towards building its pay structure.
In doing so, the approach is to ascertain, by using the most logical and acceptable methodology, what the lowest ranked staff in government needs to be paid to enable him to meet the minimum expenditure needs for himself and his family in a dignified manner.
The V CPC adopted the ‘Constant Relative Income Approach’ to estimate the minimum pay. The V CPC proceeded from the minimum pay of Rs.750 estimated by the IV CPC as on 01.01.19866 and added to it the DA of ₹1,110 to arrive at the ‘price protected’ minimum pay of ₹1,860 as on 01.01.1996.
The VI CPC used the norms set by the 15th Indian Labor Conference (ILC) in 1957 to determine the need-based minimum wage. The minimum pay was fixed at Rs.7,000 per month on 01.01.2006.
The Commission has estimated the minimum pay (the calculations for which have been tabulated in the Annexure) through the following steps:
Step 1: The food, clothing and detergent products listed and their respective quantities specified by the 15th ILC have been adopted.
These quantities indicate the monthly consumption of the listed products by a family comprising three consumption units. [For e.g. for the product ‘Dal’ the quantity specified for daily consumption is 80 grams per consumption unit per day.
The monthly consumption of Dal by a consumption unit thus works out to 2.4 kg (80 x 30). Accordingly the monthly consumption of Dal by a family comprising 3 units is 7.2 kgs (2.4 x 3).]
Step 2: The quantities have been multiplied by their respective product prices to arrive at product wise cost. The price adopted for each product is the average of prices of various items that are included in the product.
The price of an item is the average of its prices prevailing in each month from July, 2014-June, 2015. [At monthly family consumption of 7.2 kg the Commission has estimated the monthly expenditure on Dal at ₹704.44 after calculating the price of Dal at ₹97.84 per kg.
The price of Dal has been calculated as the average of prices of Toor, Urad and Moong Dal items specified under the product Dal and whose prices have been determined at ₹87.86, ₹109.66 and ₹96.00 respectively.
The prices of these three Dal items are the twelve monthly average prices for the period July, 2014–June, 2015.] The prices of all items have been sourced from Labor Bureau, Shimla.
These prices are used in the calculation of the CPI (IW) and subsequently the calculation of Dearness Allowance. In the current exercise the prices of all items are for the period July 2014-June 2015 and have been used in the calculation of DA at 119 percent operative from 01.07.2015.
Step 3: The cost of food, clothing and detergent products obtained from Step 2 has been divided by 0.8 to arrive at a total, of which 20 percent provides for fuel and lighting expenses.
This addresses the fifth component under para 4.2.3. The fourth component on housing under para 4.2.3 has not been addressed at this stage as its quantification at the final stage of pay estimation is considered more appropriate by the Commission.
Step 4: The cost estimated from Step 3 is divided by 0.85 to arrive at a total, of which 15 percent is towards recreation, ceremonies and festivities. The prescribed provision of 25 percent to cover education, recreation, ceremonies, festivals and medical expenses has been moderated to 15 percent because expenses on educational and medical necessities are being separately provided for through relevant allowances and facilities and thus need not be provided here. This partially addresses the first of the two components outside the 15th ILC norms.
Step 5: The cost estimated from Step 4 is increased by 25 percent to account for the skill factor, following the reasoning that there is no unskilled staff in the government after the merger of Group D staff in Group `C’. This addresses the second of the two components outside the 15th ILC norms.
Step 6: The cost estimated from Step 5 is divided by 0.97 to arrive at a total, of which 3 percent provides for housing expenses. This is done in view of the observation that license fees for government accommodation is about 3 percent of the total pay.
This addresses the fourth component stated under para 3 but partially so, as the 15th ILC norms had fixed the housing provision at 7.5 percent.
Step 7: The cost estimated from Step 6 is as on 1 July, 2015 when the DA was 119 percent. The DA is assumed to be 125 percent as on 1 January, 2016, the day from which the Commission expects its recommendations to be implemented by the government.
Accordingly the cost estimated from Step 6 has been increased by 3 percent (2.25/2.19 = 1.027 or nearly 3%).
The cost estimated from Step 7 is next rounded off to ₹18,000, which is the minimum pay being recommended by the Commission, operative from 01.01.2016.