Email: sg@ncoaindia.com

Letter to Shri Anant Geete Ji, Hon. Minister HI&DPE, dated 10.03.2017

Respected Sir,

The 3rd Pay Revision Committee (PRC) constituted by the Government in June 2016 to review the structure of Pay Scales, allowances, perquisites, and other benefits for Executives of CPSEs taking in to account salary , emoluments, incentives and other benefits available to them and suggest changes which may be desirable, feasible and affordable had submitted its report. The National Executive Committee of NCOA in its meeting held at Mumbai had reviewed the recommendations and felt that there is a need improve on the recommendations of the 3rd PRC to ensure that the CPSEs become modern, professional, consumer friendly, commercially successful and competitive committed to national development goals. The views of NEC are appended below.

1. Periodicity: The committee has erred in recommending that the review of the compensation & benefit structure of the CPSE executives should happen in line with the periodicity as decided for Central government employees but it should not be later than 10 years. We should realise, that the CPSEs compete with the Private Sector and not with the Government to attract the manpower. They also have to compete with Private Sector for commercial operations and not with the government. It may please be noted that Pay is reviewed and revised for the Private Sector executives in India after every Year. The recommendations of the PRC to have a periodicity of 10 years is total incorrect.

Nowhere in the world, the periodicity of Pay revision of PSE employees is linked to the periodicity of the Govt. employees. Initially, the periodicity in India was 4 years, which has been raised to 5 Years. Only in 1997 revision, the periodicity was increased to 10 years based on the recommendations of the 1st PRC recommendations. However, the 2nd PRC has categorically recommended that the revision can be considered as and when necessary on the basis of economic situation and nature of the concerned industry. Government has conveniently delayed the Pay revision till 2017. We strongly demand that the periodicity of Pay Revision shall be 5 years.
NEC demands that the Pay Scales shall be revised notionally from January 2012, and further revised from January 2017. This will also sort out all the problems arising out of Pay revision for Workmen in 2012 in a number of CPSEs. It will not burden the Enterprises with areas Payment

1. Affordability: The revision of Basic Pay and Retirement benefits shall not be linked to affordability. The affordability clause for Pay revision shall be applicable for revision of Perks & Allowances and PRP only. Non implementation of Pay revision will result in exodus of employees & Enterprise will not be able to attract competent executives. This will result in making the Enterprise Sick
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2. Fitment Benefit: The 3rd PRC had recommended that the fitment benefit 15% on Basic pay plus DA after 10 year revision. This is based on the Pay revision implemented to Central Government employees.

It may please be noted that 30% fitment benefit on Pay plus DA was extended to Executive in CPSEs after 10 year revision in 2007.
NEC demands, 15% fitment benefit on Pay plus DA be extended for the notional Pay revision in Jan 2012 and further 15% fitment benefit on Pay plus DA be extended for the revision in Jan 2017.

3. Pay Scales: The Pay Scales recommended by the PRC are reasonable and satisfactory.

4. Bunching: In case of Bunching, the principle recommended by the PRC is rational. However, the difference between of Pre revised Basic Pay plus DA shall be added to the starting point of the revised scale and not Basic alone.

5. HRA: The rates of HRA as a % of Basic pay as existing shall be continued. By continuing the same % of basic pay as HRA, we are only indexing it. It may please be noted that the Hose rents have increased more than the All India Consumer Price Index for Industrial Workers and there is no rational in decreasing the %.

As and when the DA increase by 50%, the DA shall be merged with Basic Pay, and HRA shall be calculated on this.

6. Perks & Allowances: The PRC had recommended to reduce the Perks & Allowances to 35% of Basic Pay. They also recommended that cost incurred on infrastructure facilities is not to be charged within the recommended ceiling on Perks & Allowances. It had recommended 50% perks taxation for company owned accommodation shall be loaded within the prescribed ceiling. Expenses incurred towards usage of Telephone cab allowed to be compensated outside the ceiling. Non practicing Allowance (NPA) for Medical officers shall be reduced to 20% and NPA shall not be considered for HRA.

The Perks & Allowances Ceiling is 50% of Basic Pay for the last 20 years and the recommendation to bring it down to 35% is not reasonable. This Perks & Allowances are market driven and this % has gone up in private sector during the last 20 years. It may please be noted that this is a ceiling and Enterprises based on their affordability will fix the percentage. In view of this NEC demands the Ceiling shall be revised 40%.

Perks taxation for housing accommodation shall be borne fully by the Enterprise and shall not be loaded to the ceiling of Perks & Allowances.

1. PRP: The committee has only addressed the Performance Related Pay for Executives based on the Profitability. We demand that the PRP shall also a an additional component based on the improvement on Productivity

PRC Had recommended that CPSEs should ensure that the PRP / Incentive / Ex-gratia (in lieu of bonus) payment to unionized workmen should not exceed the PRP pay out to entry level of non-unionized supervisors / executives, as applicable in respective CPSEs.
NEC demands that in case the PRP / Incentive / Ex-gratia (in lieu of bonus) payment to unionized workmen exceeded PRP pay out of entry level of non-unionized supervisors / executives, it should be considered as an anomaly and the difference amount shall be paid to the Executives / Supervisors as protection of PRP.

2. Superannuation Benefits: The contribution of 30% of Basic Pay plus DA for superannuation benefit is not sufficient as the Pension is becoming very marginal. The 3rd PRC recommendation of additional amount beyond Rs. 10 lakhs for gratuity shall be allowed outside the limit of 30% is not sufficient.

NEC demands, that the contribution for superannuation benefit shall be increased to 35% of Basic Pay plus DA.
For meeting the requirements of Medical benefits to retired employees, a corpus shall be created immediately with 3% of PBT as recommended by 3rd PRC.

3. General:
Government should realise that it is essential revise the Pay of employees of loss making & Sick Enterprises in line with the market and keep the employees motivated, if they really wanted to revise the Enterprise. Only if the management wants to make an Enterprise Sick and liquidate it, the Pay is not revised & salaries are not paid, so that the employees leave on their own. Government as a Model Employer should not follow this unethical practice.

Ten percent of funds obtained though disinvestment in CPSEs shall be earmarked for payment of salaries to loss making and Sick Enterprises. 15% of funds obtained though disinvestment in CPSEs shall be earmarked for revival package of Sick and loss making CPSEs.

We would like to meet you personally and explain the ground realities. We request you Sir, to kindly give us a hearing sometime during next week at your convenience,


With Kind Regards,
Yours Sincerely,
(Baby Thomas, Secretary General)