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28 Jun, 2024 11:01 AM

Govt Mulls Study on Govt Salaries vs Private Sector

Govt Mulls Study on Govt Salaries vs Private Sector

New Delhi, June 27: The government is considering a study to compare salaries of Public Sector Undertaking (PSU) staff with their private sector counterparts, according to a Moneycontrol report on Thursday.

The study would primarily focus specifically on PSU employees. Sources indicated that internal discussions have taken place, but a final decision rests with the Finance Ministry. Global accounting firm Ernst & Young is reportedly being considered to conduct the study.

This news comes amidst demands from central trade unions for the formation of the 8th Pay Commission to revise salaries for government employees. Pay commissions are typically set up every decade to adjust salaries for central government staff. The 7th Pay Commission's recommendations were implemented in 2016.

However, PSU salaries are not automatically revised based on Pay Commission recommendations. They undergo periodic revisions every 4-5 years, with the next one due in 2027. These revisions are based on recommendations of a separate PSU Pay Revision Committee.

Some state governments have extended certain benefits from the 7th Pay Commission to their PSU employees, but a salary gap persists, especially at higher levels. For instance, the Chairman of state-run SBI earned Rs 27 lakh annually in FY24, compared to Rs 6.51 crore for the CEO of HDFC Bank in FY22.

This disparity was previously highlighted by former RBI Governor Raghuram Rajan in 2016. He noted that the public sector "overpays at the bottom but underpays at the top."

The proposed study could shed light on the extent of this salary gap and inform future decisions regarding PSU compensation.




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