Trade unions representing Railway employees today welcomed the announcement to set up the 7th Pay Commission, but demanded that recommendation be implemented with retrospective effect from January 1, 2011.
The government has announced constitution of the Seventh Pay Commission, which will look into the salaries, allowances and pensions of about 80 lakh of its employees and pensioners.
“We welcome the government’s move to set up the 7th Pay Commission but we have a reservation. It should be implemented with effect from January 1, 2011 as in the case of Central PSUs whose employee pay scales are revised every five years,” told Union Leaders.
Earlier in the day, Finance Minister P Chidambaram said in a statement that Prime Minister Manmohan Singh has approved the constitution of the 7th Pay Commission and its recommendations are likely to be implemented with effect from January 1, 2016.
Union Leaders said that during the discussion, they would press for merger of up to 50 per cent of dearness allowance with the basic pay, which is a prerequisite for setting up a pay commission.
As per the practice, the dearness allowance is hiked twice in a year by the Central Government to provide relief from inflation to its employees.
This is based on a set formula after factoring in the year-long average of all India Consumer Price Index for Industrial Workers.
The merger of DA with basic pay helps central government employees as certain allowances are paid as proportion of the basic pay and hence merger results in higher allowances.