Seventh Pay Commission Recommendations Report: 20%-40% Pay Hike for Central Government Employees

It is learnt that the government appointed Seventh Pay Commission is actively working on drafting the recommendations for increase in salaries of lakhs of central government employees. It is expected to submit its recommendations to the government by this year end. In what could be a the biggest bonanza of all times, it is expected that central government employees can receive salary increase in the range of 20% to 40%.

The Seventh Pay Commission

The Seventh Pay Commission was appointed by the former government during the UPA regime. It was constituted in February 2014, and was set a target of 18 months to come up with its recommendations.
It is headed by Justice AK Mathur.

Recommendations and Employee Benefits by Seventh Pay Commission

- Speculations are high that pay hike recommendations for central government employees can be in the range of 20% to 40%. The range of 20% to 25% is the one which is expected to go through. However, these are only expectations, real details will emerge as recommendations are submitted and accepted by the government.

- It is estimated that more than 48 lakh central government employees, and more than 55 lakh pensioners will reap the benefits of the Seventh Pay Commission recommendations once it comes into effect.

- The Seventh Pay Commission recommendations are learnt to be effective from January 1, 2016. Another effective date making news is April 1, 2016, but no later than that. However, it is possible that the actual implementation may be at a later date. In that case, employees and pensioners can expect payout of arrears meaning payment of lump-sum amounts in the form of arrears.

- It is expected that there will be no change in retirement age of the employees, and it will be retained at 60 years. There were news that retirement age may be reduced, which would have led to more number of pensioners at early stage, and would result in more expenses for the government.

- Salary grade pay and Dearness Allowance may be merged to form a new pay scale

- Each year, increment should be in the range of 5%-6%. Officer's increment should be based on performance.

- Education Allowance should be Rs. 40 per month for children up to class 10, and Rs. 50 per month for children in class 11 and 12. If the children are staying in a hostel, the amount could be Rs. 100-300

- Central Secretary and Cabinate Secretary should have seperate scale.

- VRS may be made mandatory for low performance employees who are above the age of 55, or the ones who have completed 30 years in service.

Challenges with the Seventh Pay Commission

It is expected that the recommendations of The Seventh Pay Commission will cause a big expense to central government, if implemented. It may mean additional cost of 1.16 lakh crores.

Additionally, government has been spending heavily recently. Examples include announcement of big package for states like Bihar. GST infrastructure may need similar high expenses.

Irrespective of all the challenges, its the central government employees who are expected to benefit.