PSU Employees Pay Hikes approved by Cabinate: Sixth Pay Commission Pay Hike

The latest news on the Sixth Pay Commission: It is regarding the Pay Hike for PSU Employees. It is in continuation of our previously reported article on 26th October, where we mentioned that there can be a Pay Hike for PSU Employees and the good news it has been approved by the cabinate. Wikipedia on Sixth Pay Commission Site
It is the time when all the employees in the private sector, especially those burdened with loans, are wishing not to loose their jobs. Their counterparts in the government companies like the PSU or Public Sector Undertaking companies, are laughing all the way. Any why shouldn't they, because today the cabinate has given its approval to hike the salaries of employees of the Government PSU.

How many employees will benefit from this PSU Employees Pay Hike?
Around 2.5 lakh employees are expected to benefit from the PSU Employees Pay Hikes.

Which company employees will benefit from the PSU Employees Pay Hike?
It is learnt that more than 200 company employees will beenfit from the PSU Employees Pay Hike. However, some news sources have quoted the no. of companies to be around 270. Though there are doubts about it.
Image Courtesy: The Hindu.
Which date will PSU Employees Pay Hike be effective?
The new compensation package become effective from January 1, 2007.

What range is the PSU Employees Pay Hike offered?
As per the news the basic pay of chiefs of central PSUs will now range from Rs 55,000 to Rs one lakh.
Performance-related incentives and stock options could also be part of the revised pay package. The government’s decision is aimed at stopping the switching of jobs of talented CPSU employees to the private sector.

What other benefits can be expected by the PSU Employees Pay Hike?
The pay hike package will include revision in dearness allowance performance related-incentives and other perks, said Prithviraj Chavan, Minister of State in Prime Minister's Office. Money for the pay hike would come from individual companies.

There are 247 central public sector undertakings, of which 216 are in operation. The companies employ around 16,14,000 people, of whom 12,36,000 negotiate their wages directly with their respective companies.
However, it is reported that only Profit making PSU employees will be given a PSU Employees Pay Hike. Not sure whether this news is true and whether the loss making PSU employees will have any pay hike.

PSU Employees get Pay Hike: Sixth Pay Commission

It's time for the government companies or PSU company employees to cheer for Diwali season. The reason - government has finally agreed to revise the pay scales of employees working in 69 public sector undertakings (PSUs) on the lines of the Sixth Pay Commission offered to central government staff.
However, there is a catch - The pay hike benefit will be given ONLY to the employees of those CPSUs that are NOT making losses, as reported in the news and also, these PSU's should be in a position to absorb the additional expenditure from their OWN resources without any budgetary support from the government.


So, what's the message in a nut-shell - basiscally, this being the election year, the government has done its task by announcing the pay revision for the employees of the PSU's, but the government is not going to bear the cost of the expenditure for the raised pay hikes. The company or the PSU, which is running in profit will have to shell out the money from its own balance sheet to make adjustments for the Pay Hike or Salary hike of PSU company employees.

Where will this PSU Employees get Pay Hike have an effect?
This would mean that the balance sheet of the PSU will be hurt, and hence the stock prices will be hurt.

As per the news, The PSUs include Mahanagar Telecom Nigam (MTNL), Indian Tourism Development Corporation (ITDC), NHPC and North-Eastern Electric Power Corporation (Neepco) among others. These PSUs follow the central dearness allowance pattern and are governed by a separate high power pay committee.

“The pay scales of the employees will be revised with effect from January 2006. It will be now up to the board of directors of the respective public sector company to consider the pay revision, keeping in mind the affordability and capacity of the CPSU.

They’ll have to submit a proposal to their respective administrative ministry, which will approve the proposal with the concurrence of its financial advisor,” a department of public enterprise official said.

As per the recommendations, there will also be a revision in city compensatory allowance, house rent allowance and dearness allowance (DA). Already in April this year, the government had increased the DA for PSUs by 6% with effect from January this year.

“This will make a stronger case for the early implementation of the second pay revision committee report for the companies following the industrial dearness allowance pattern. However, not all companies following the CDA pattern will be able to adopt the new pay revisions as some of them are sick or loss-making units,” the official said.