Monday, July 3, 2017

Perils of Pay Revision in Public Sector Enterprises

Perils of Pay Revision in Public Sector Enterprises


The  Lakhs of Central Government Employees have been getting their periodic wage revision of course once in ten years since 1946 thro Central  Pay Commission. The present 7 th CPC was implemented with effect from January 2016   and the disappointed Employees are still waiting for the revision of their allowances. The present BJP Government has given an attack in their own style   by appointing allowance committee and not only delayed their case but forfeited their dues of various benefits of allowances of the past eighteen months.
 In the case of Public sector Officers, the practice of appointing a centralized Pay Revision committee has been in vogue since their 1997 pay revision. The first such committee appointed for the Executives of PSus viz Mohan Committee made some fundamental changes by bringing uniform standard pay scales, 100 % neutralization of cost of Index viz Dearness allowance and   brought regress changes in the periodicity from 5 years to 10 years as that of Central government Employees.  The workmen of the various PSUs have been getting their wage revsion thro bilateral negotiations as per DPE guidelines issued then and there  and the last one issued was  ‘7th Round of   Bilateral Wage Revision  for workmen’. The workmen are greatly disappointed, as the 8th round guidelines  are unnecessarily delayed  and not  issued by the DPE till this date with the trick of linking 3rd PRC major clauses like affordability, periodicity .
Second PRC namely Rao Committee for the Executives was implemented for 2007 revision of scales thro DPE guidelines during 2008-09. Even   loss making units were allowed to get the pay revision on the review of the concerned ministry in these two earlier Committees, though affordability clause was mentioned.  The Third Pay Revision committee was constituted on june 9th of 2016 by the GOI for the Executives of  PSUs. The committee was directed  with the terms of reference to recommend pay scale changes that are desirable, feasible, affordable and linking the same to promoting efficiency, productivity and profitability.   The Report of 3rdPRC   Chaired  by  satish Chadra with other members, including the Secretary DPE as member submitted its report on 21st November 2016 well within the stipulated period of time given to  the committee. Unfortunately the report was kept in dark for two full months and   thereafter on Jan 27th of 2017 only put in public domain.
The Satish Chandra committee recommended 15 % increase in pay only to the companies that are profit earning that also  with a condition of financial impact linked with PBT( profit before tax). The affordability factor is fully linked with PBT factor not mere one year but with 3 previous years. The financial impact for full 15 % wage hike is also restricted with the financial impact of 20 % of PBT. A company having profit of say 1000 crores (PBT) may be allowed to  implement  15 % hike  only when the expenditure  for the wage revision is well within  200 crores that is 20 % of PBT. If the expenditure is higher, then the hike is reduced to 10 %, 5 % and even to nil %.
Satish Chandra committee has gone beyond its terms of reference by completely linking the affordability with profitability and restricting with 20 % of PBT. Unfortunately the committee meddles with the affairs of Non Executive Wage Revision also and making the bilateral negotiation meaningless. The committee has recommended that the Non Executive wage revision should not create any conflict with that of Executives and the periodicity should not be less than that of Executives.  The fact that Affordability is not synonym to Profitability was not cared.
The Guidelines issued by DPE dated 25th June 1999 at the behest of the First PRC Mohan Committee was also ignored by this committee.   Even PSUs that incurred loss in the last  3 years were  allowed to adopt  new  revised  wages  with the approval of the concerned ministry by getting an estimate how resources would be generated by the PSUs to meet the extra expenditure.  These guidelines were again reiterated by DPE for workmen in  7th Round.  Unfortunately 3rd PRC has not taken this into consideration while recommending the affordability clause.  The  exemption  is given only to those PSUs  which are statutorily formed.
The Executive Folk  of PSUs under various classification have been advancing different demands that suit their concerns but failed to fight this discrepancy with the fond hope that out of 244 PSUs 165 are in the profit making mode. The profit making flagship companies and the associations are demanding 30 % fitment for them and changes in the cafeteria of allowances, and the ambit definition of ceiling of superannuation benefits. Even in profit making companies, it is difficult to get the said uniform fitment 15 % as the PBT clause  of 3rd PRC is  so regress. Even a company though having profit may not get its pay revision, if the expenditure calculated goes beyond 40 % of Profit Before Tax  ( PBT).  The question of wage revision of loss making units which are  on the revival mode is at stake.
There are more than 70 PSUs that are loss making. More than 60 PSUs are coming under the bracket of Sick Units. The old BRPSE system is over now. The BJP government has winded up that entity during November 2015. The monitoring duty is entrusted to the ministry concerned. The DPE has issued 2 major guidelines   regarding Revival/ Restructuring/Closure  of Sick/Incipient Sick/Weak PSUs. In each financial year the administrative ministry should analysise the status and suggests if closure is needed. Definition for Sick, Incipient Sick, and Weak PSus are also given in the SICA act 2013. DPE has issued another guideline for time bound closure of sick/ loss making PSus during September 2016. The closure process will start after getting in principal approval of CCEA/Cabinet. The attacks are now severe not only for wage revision, but for protection of jobs and the PSUs itself. The land property of all PSus now becomes cynosure. Even for this DPE has issued guidelines.
Unfortunately in the  list of AirIndia, BSNL,MTNL- companies like BHEL, SAIL, ONGC Videsh are also joined as loss making entities.  These companies have their own glorious past and the employees and Officers  made them prominent by their sweat. Denial of Pay Revision in the name of profit- affordability clause will bring serious industrial unrest in these companies. But this fact was ignored when the meeting of Committee of secretaries under the chairmanship of Cabinet Secretary held on may 12th 2017.  The secretaries who should take responsibility for the industrial peace in the concerned ministry were unfortunately silent and failed to impress the Government thro cabinet secretary on the lines of DPE guidelines /  orders issued for the first PRC . The responsibility is mainly on the shoulders of DPE secretary preparing cabinet note for the implementation of 3rd PRC .
The telecom behemoth BSNL, defined as a priority sector as per 14th Finance commission, is struggling to have positive turnover in the stiff competition with the giant privates like Airtel. Idea, Raliance. It is already in the operational profit side but net profit is negative. In the name of loss making, BSNL Officers may be denied the benefits of Pay Revision as per 3rd PRC. This will have serious repercussion on the 2 lakh workmen of BSNL when they enter wage negotiation with the management.
 Unfortunately a teeth less unilateral Wage Revision committee of  higher Officers was set up by BSNL on Dec 26th 2016 without any power to call the unions to negotiate. There is no terms of reference given because of absence of the relevant DPE guidelines. NFTE BSNL , one of the recognized union has been struggling to bring the necessary DPE guidelines for the Non Executives. DPE should issue the guidelines for the 8th round of negotiations at the earliest. A letter is addressed to NFTE by DPE that the same is under serious consideration. Even for issuing guidelines, so much fuss is going on.
 In the 7th round guidelines, the Non Executives got favourable guidelines for the loss making units also. The guidelines were issued on 9th Nov 2006.  The workmen of  PSUs that are loss making but revival mode need a similar guidelines for this wage negotiations also.
“(vii) CPSEs which incurred net loss during any of the three financial years preceding the
proposed wage negotiation, but not referred to BIFR/BRPSE may also be allowed to enter
into wage negotiation, provided they give an estimate to their administrative
Ministry/Department as to how resources would be generated by them to meet the extra
expenditure arising out of implementation of wage revision.
(vi) In case of sick/incipient sick CPSEs referred to Board for Reconstruction of Public Sector
Enterprises (BRPSE), the wage revision would be considered on the basis of final decision on
the recommendations of BRPSE.”
Unfortunately the 3rd PRC not mentioned in its recommendations any relief to Incipient Sick Units like BSNL. As per 7th Round of DPE,  even consecutively 3 years    loss making  company was  also permitted to revise the wages of their employees provided  they should show their estimate about the resources to meet the expenditure on account of wage revision.  Unfortunately 3rd PRC is not taking these guidelines into consideration.
One cannot fail to  appreciate the stand of the Management of BSNL   for seeking permission from the administrative Ministry and DPE by showing their estimate and resources to meet the expenditure  on account of  15 % wage revision (without any increase in perks and allowances) on the leverage of debt equity ratio. Similar appeals from concerned BHEL, SAIL managements are also the need of the hour.
If in the name of incipient sickness or in the name of profitability ,  the wage revision is avoided to  these loss making Executives like BSNL , it will create serious repercussion on workmen unions also in their bilateral negotiations..  The PSU employees are in the hope that all the Central Unions  should take these aspects into consideration and  try their  best to unify all the forces to face the onslaught  coming from the Government. It seems that struggle is inevitable. It is time to be more vigilant and  let employees and officers of PSus  be  ready to observe any call or direct action to safeguard the interests of lakhs of employees and Officers.


  1. No use.Justice Mohan .Justice Jagantha roa Justice Sathish Chandra all these people's forgot this innocent sick psu slaves.No wage revision is allowed for the past 30 years for this sick psu employees.


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  4. I'm using worlds most worst BAD words against this DHI USELESS OFFICERS.