A pay commission is an Indian government-appointed administrative office that reviews the pay structure of central government pensioners and employees (military and civil divisions) once every decade (approximately). It then presents its recommendations for increase in pay and allowances of the workforce, which the government may or may not abide by. In other words, it’s not mandatory to implement pay commission recommendations. But generally, the government accepts the suggestions.

The new pay structure gets invariably adopted by state governments, with or without a few changes. A new commission is formed for each decade, with the team taking 18 months (on an average) from the time of establishment to present its recommendations. Till date, there have been seven pay commissions.

CommissionDate of EstablishmentReport SubmissionMinimum Pay (In Rs.)Maximum Pay (In Rs.)
First Pay CommissionJanuary, 1946May, 1947552000
Second Pay CommissionAugust, 1957August, 1959803000
Third Pay CommissionApril, 1970March, 19731963500
Fourth Pay CommissionJune, 1983March, 19877508000
Fifth Pay CommissionApril, 1994January, 1997255026000
Sixth Pay CommissionOctober, 2006March, 2008700080000
Seventh Pay CommissionFebruary, 2014November, 201518000225000

Generally, pay commissions are considered the vehicle through which the Indian government hikes base salaries of its employees. Other aspects such as retirement benefits and promotion policies are also looked into. The recommendations may also look into slashing the workforce, abolishing vacant posts, and reduction in pay scales.

Minimum Pay

Since 1959, the central government employees’ minimum pay has gone up 225 times. The calculation is done in the belief that, besides other allowances and facilities, the minimum pay should be sufficient for even the lower-rung government employees to have a decent standard of living.

Minimum pay is calculated keeping a family of four in mind: husband, wife and two kids. The husband gets one consumption unit; the wife is allotted a unit of 0.8. The two kids (below 14 years of age) have 0.6 units each. The minimum pay therefore has to cater to 3 consumption units (1+0.8+0.6+0.6). The Indian Labour Conference devised this formula in 1957, and all pay commissions have adhered to it ever since.

The calculation accounts expenditure relating to clothing, food, education, electricity, fuel, expenses relating to marriage and festivals. Certain portions of the amount are for housing and employee skills. According to the central government, all its employees are skilled.

Commission Team

Usually, the panel comprises respected senior citizens, including civil servants, judges, economists, and dignitaries from various other fields. The team puts forth its recommendations after studying the job market, government expenses, and several other economic and social factors.

Criticisms

Pay commissions have often been criticized for crippling the economy. In fact, the Centre was not considering setting up the sixth pay commission and rejected the request as both the central and state governments were already unable to bear the fifth pay commission’s financial burden. Also, the Twelfth Finance Commission of India requested the Centre to quit the pay commission practice altogether.