Amid 8th Pay Commission buzz, report says govt mulls study to compare PSU and private sector salaries

The government is considering to commission a study to compare the salaries of public sector undertaking (PSU) staff with their private sector counterparts, a report said on Thursday, June 27.

“Internal discussions in the government have happened on this, but a final decision is yet to be made,” the official was quoted as saying.

The final decision on commissioning the study has to be taken by the Finance Ministry, the source reportedly added, further noting that global accounting major Ernst & Young is being considered to undertake the study.

8th Pay Commission buzz

The report comes at a time when central trade unions (CTUs) have raised the demand for the formation of the 8th Pay Commission to revise the salaries of government employees.

The pay commissions are constituted once in a decade to revise the fitment factor and pay matrix for government staff. The 7th Pay Commission was formed in February 2014, and its recommendations were implemented from January 1, 2016.

However, the pay commission recommendations are not applied by default for PSU employees. The pay panel's report is applicable only for the revision of government staff.

For PSUs, a periodic revision of salaries is undertaken at every 4-5 years, and the next revision is due in 2027. The salary is revised as the per the recommendations of the PSU Pay Revision Committee.

However, some state and union territory governments have extended few of the 7th Pay Commission benefits to the PSU employees as well.

Salary disparity

At present, salary earned by top staff of PSU entities are considered to be lower as compared to their private counterparts.

For instance, Dinesh Khara, the chairman of the state-run SBI, drew an annual pay of Rs 27 lakh in FY24, as per the details shared by the lender. In comparison, Sashidhar Jagdishan, the CEO of HDFC Bank, drew a salary of Rs 6.51 crore in FY22.

Former Reserve Bank of India Governor Raghuram Rajan had, in August 2016, pointed out that pay disparity, especially in the top-level management of the public and private sector companies.

“One of the problems, of course, is that the public sector overpays at the bottom but underpays at the top. I also feel underpaid,” Rajan had said.