PAY REVISION

IN PUBLIC
SECTOR

AYUSHI
AGRAWAL
MBA 4TH
SEMESTER
 PAY
REVISION
Salary revision is the process of
modification of entire salary
structure including all primary
components.

This is where it differs from salary

hike in which an increment can be
related to only one component of
the entire salary structure.

In simple words, 12 percent salary

revision implies to 12% increase of
all components of salary.
 CONDITIONS
OF PAY
REVISION

When the current pay structure of

any company does not match the
labor - wage structure of the
market.

Revisions are also used to decide

the new salary structure of
employees after a promotion.
 PAY REVISION
IN PUBLIC
SECTOR

Justice Mohan committee,

appointed by the government of
India on 31 august 1996 to
recommend revised pay structure,
allowances, perquisites and
benefits for the board level
functionaries, below board level
executives and non-unionised
supervisory staff submitted its
report in December 1998.
 ISSUES

1. Capacity
Till 1991, capacity to pay was not to Pay
reckoned. There was broad uniformity
in pay structure and some allowances,
even though most profit-making
companies tended to pay higher gross
emoluments to their employees than
the others. In the post liberalization
(1991 to date) pay revision was
deferred in loss- making companies.
The historical circumstances and
constraints autonomy in decision-
making. Therefore, the union’s
argument is that capacity to pay
cannot be considered in isolation.
 2.
Relativity

Government has revised the pay and

benefits of civil servants without
regard to its financial situation. This
created problem for some state
government whose financial situation
was even worse because their own
employees expect the state
government to pay at par with central
government. When the government, as
owner, is now asking the public sector
to revise pay only if they earn profits
without increasing unit labor costs and
pay revision.
 3. Need for
the
Autonomy

Without civil service reforms, both

reforms and autonomy in the public
sector remain a wishful indulgence.
Without autonomy and market
mechanism, insistence on capacity to
pay is considered arbitrary by the
unions and even by most managers.
 4. Duration

The government now insists on pay

revision once in 10 years for the
employees in public sector units. The
unions have been resisting. While a
few public sector firms revised pay for
officers on a 10-year commitment, the
group of ministers appointed by the
government is inclined to rollback the
government instructions and
recommend a pay revision once in 5
years. If 5-year agreements continue Pay revision -
to be the norm, the agreements signed due from 1
now (April 2000 or thereafter) will January 17
expire by December 2001.
 5. Parity
between
officers
The parity between the lowest paid and
worker and the highest paid executive workers
was reduced from about 20 in early
1970s to less than 6 at the end of
1999. Justice Mohan committee
recommended that the parity should
be raised to 10. But if one were to go
by the sales, it recommended for the
executives in the public sector
undertakings, without reducing the
existing pay scales of unionized
workers-at a time when the existing
wage agreements expired and became
overdue for revision- it would not be
possible to increase the parity to 10.
 6. Parity
between
the public
sector and
This is a tricky issue. At the worker private
level emoluments in the public sector
were estimated to be 1.5 times higher
sector
than their counterparts in the private
sector. From senior manager onwards,
emoluments in the public sector could
be at least 5 to 10 times less than
counterparts in the private sector.
 7. Parity at
the worker
level
between
In many companies, permanent
workers doing similar jobs with more
the
or less similar skills get up to 8 to 10 permanent
times more pay than casual and and casual
contract workers working on similar
jobs at the same site. While successive contract
pay commissions and collective worker
arguments in most cases scuttled the
issue, it is frequently raised by a few
unions and some non-governmental
organizations.
 8.Performa
nce-linked
In the public sector units where pay
performance-linked payments exist,
the proportion of such payments in the
total pay never exceeded 8 percent till
1999. Justice Mohan committee
recommended that perquisites and
allowances should not exceed 50
percent of the day and gross ceiling of
5 percent of distributable profits for all
employees of the company. In the
public sector, as per justice Mohan
committee recommendation, 5 percent
of the distributable profits should be
distributed among all the employees
whose number usually ranges from
over 3,000 to over 100,000.
 CONCLUSIO
N

Companies usually study the pay scale

patterns of similar job profiles in the
market and carefully design the salary
structure of employees. Sometimes a
huge CTC may not lead to productive
increments in future.
THANK
YOU !!