At last month's National Council (Staff Side), Joint Consultative Machinery (NC-JCM) meeting, a proposal was made to increase the number of family units considered in salary calculations from three to five. This could boost pay revisions under the 8th Pay Commission. It has been argued that if the government accepts this, then the fitment factor for revising basic salaries could cross 3, potentially resulting in major pay hikes for employees.
The demand is said to have received support from several central government employees and pensioner associations. They believe that expanding the family unit size from 3 to 5 could raise the fitment factor that ultimately determines how much the salaries increase under the pay commission.
The three family units concept was introduced in the 15th Indian Labour Conference (ILC) in 1957, when discussion regarding need-based norms of fixing wages were held, as per the expert committee report.
Under this, a family unit includes the husband, wife, and two children. These are taken into account while calculating basic wages in a pay commission.
However, the employee associations argue that the current framework has failed to reflect the present social and legal realities, the Economic Times reported.
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C Srikumar, secretary general of All India Defence Employees' Federation (AIDEF), said that the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 makes it a legal responsibility for children to support their parents. This is the reason why AIDEF is asking to increase two more units.
Adding to this, Manjeet Singh Patel, National President, All India NPS Employees Federation, highlighted that people nowadays live in nuclear families. Due to this, the dependency of elderly parents on their children is more than ever. That's why the employee bodies want parents' inclusion as family units.
What To Expect?
Patel told the Economic Times that the basic pay might increase by 66% if family units are increased from 3 to 5. This means an added fitment factor of 0.66.
Notably, the 66% increment comes based on 33.33% per family unit.
Here's looking at three scenarios showing how this might influence the fitment factor:
Scenario 1:
Here, calculations assume no change in family units and only consider DA increases and annual increments. If an employee's basic salary is Rs 78,800, current DA is 58%, annual increments are 12% and estimated DA rise is 12%, then fitment factor calculation will be 1 (basic pay) + 0.66 (DA) + 0.12 (annual increment) = 1.76.
In this case, an estimated revised basic salary could be Rs 1,38,688.
Scenario 2:
In this, family units increase from 3 to 5. This means that the additional family unit factor of 0.66 gets added to the base fitment factor in the first scenario.
That means, the total fitment factor will be 1.76 + 0.66 = 2.42.
Here, the estimated revised basic salary would be 78,800 x 2.42 = Rs 1,90,676
Scenario 3:
During the 7th Pay Commission, the government granted a growth factor of 15%. Assuming the earlier growth level, the numbers change significantly.
In this case, the calculation steps include:
1. Rs 78,800 basic pay at 1.76 fitment factor= Rs 1,38,688
2. Per family unit (for three units) = Rs 46,230
3. Revised salary for five family units is 5 X Rs 46,230 = Rs 2,31,150
4. Derived fitment factor = 2.94
An addition of 15% growth factor takes it to - 2.94 + 0.15 = 3.09
This means the estimated revised salary would be 78,800 x 3.09 = Rs 2,43,492.
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