8th Pay Commission: Highest and lowest salary comparison - why 7th CPC felt it was not appropriate

Like all previous pay panels, the 8th Central Pay Commission (CPC) will not only examine the current pay structures but also look at the gap between the lowest and highest salaries offered to Central Government employees.

Since the first pay commission, this gap between the lowest and the higher pay has been represented through the compression ratio, which is the ratio of the highest salary received by the Secretary to the Government of India to the minimum salary drawn by an employee at the lower level.

The compression ratio declined from 1:36.4 in the first pay commission to 1:11.4 in the 6th pay commission. In the fourth and fifth pay commissions, the compression ratios were 1:10.7 and 1:10.2 respectively. But it increased in the 7th CPC. By the above definition, the compression ratio in the 7th CPC works out to be 1:12.5.

*Calculated as per old method. 7th CPC recommended a different approach to calculate the compression ratio

However, the 7th Pay Commission felt it was not "appropriate" to compare the entry pay of the lowest functionary in the government or the lowest salary with the highest pay drawn by the Secretary of Government of India.

Why?

The 7th CPC said the calculation of the compression ratio should be based on a comparison of like-to-like employees.

Sharing an example, it said, the lowest pay at entry level in Group C may be compared with the entry pay of Group. As the 7th CPC recommended ₹18,000 minimum pay in Group C and ₹56,100 in Group A, the compression ratio, in this case, works out to be 1:3.12, which signifies that a Group A officer at the entry level gets around three times more pay than the entry-level worker in Group C.

The 7th CPC report shared another example for comparing the compression ratio. It said comparisons can be made between the maximum pay (₹56,800) of any employee who has joined in level 1 and rendered 35 years of service and received pay progression solely by way of MACP with the maximum pay of ₹2,25,000 drawn by Group `A’ officer at Apex level (level 17). In this case, the compression ratio works out to be 1:3.96.

“Since the maximum pay drawn for different officials will depend on their age of entry, promotional prospects in their services/cadres, and individual performance, the minimum pay at entry level is considered a better comparator,” it said.

The 8th Pay Commission is expected to be set up and begin its work from next month.