PSU Employees get Pay Hike: Sixth Pay Commission: Finance Trading Times

PSU Employees get Pay Hike: Sixth Pay Commission

It's time for the government companies or PSU company employees to cheer for Diwali season. The reason - government has finally agreed to revise the pay scales of employees working in 69 public sector undertakings (PSUs) on the lines of the Sixth Pay Commission offered to central government staff.
However, there is a catch - The pay hike benefit will be given ONLY to the employees of those CPSUs that are NOT making losses, as reported in the news and also, these PSU's should be in a position to absorb the additional expenditure from their OWN resources without any budgetary support from the government.PSU Employees get Pay Hike Sixth Pay Commission

So, what's the message in a nut-shell - basiscally, this being the election year, the government has done its task by announcing the pay revision for the employees of the PSU's, but the government is not going to bear the cost of the expenditure for the raised pay hikes. The company or the PSU, which is running in profit will have to shell out the money from its own balance sheet to make adjustments for the Pay Hike or Salary hike of PSU company employees.

Where will this PSU Employees get Pay Hike have an effect?
This would mean that the balance sheet of the PSU will be hurt, and hence the stock prices will be hurt.

As per the news, The PSUs include Mahanagar Telecom Nigam (MTNL), Indian Tourism Development Corporation (ITDC), NHPC and North-Eastern Electric Power Corporation (Neepco) among others. These PSUs follow the central dearness allowance pattern and are governed by a separate high power pay committee.

“The pay scales of the employees will be revised with effect from January 2006. It will be now up to the board of directors of the respective public sector company to consider the pay revision, keeping in mind the affordability and capacity of the CPSU.

They’ll have to submit a proposal to their respective administrative ministry, which will approve the proposal with the concurrence of its financial advisor,” a department of public enterprise official said.

As per the recommendations, there will also be a revision in city compensatory allowance, house rent allowance and dearness allowance (DA). Already in April this year, the government had increased the DA for PSUs by 6% with effect from January this year.

“This will make a stronger case for the early implementation of the second pay revision committee report for the companies following the industrial dearness allowance pattern. However, not all companies following the CDA pattern will be able to adopt the new pay revisions as some of them are sick or loss-making units,” the official said.
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rahul said...(on 12 January 2009 at 00:18 )  
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