Effect Of Merger OF DA On Wage Revision

 

Unions & IBA agreed for DA merger with Basic Pay at 4440 index points (DA rate as onNov.2011 –one year prior to expiry of previous Wage settlement) which was the average DA index of Jul, Aug & Sept2011, a whopping loss of 436 DA index points of one year till October 2012. Which means 10.84%(taken @ 0.10 post merger rate) DA on New Basic is left uncovered from merger as on 1stNovember 2012.

 

The present DA index is around 5212 (i.e.1303 slabs) less 4440 points(proposed merger) i.e. 1110 slabs (difference of 193 slabs) which would be 19.3 % DA w.e.f. August 2013. If DA is fully neutralized bymerger, it would have been a better deal.  But Unions failed to ensure DA merger as on the last day of the previous wage Settlement!  

Process of merger of DA @ 4440 points as on 1-11-2011 – its impact on pay scales in Banks:

Negotiating Unions and IBA has agreed to merge the DA @4440 index numbers (1960=100) in the basic pay. To understand the merger process let us keep in mind;

In last settlement DA was merged at 2836 ACPIN (1960=100).

1.     As on 01.11.2011 AICPIN was 4440.

2.     Date of merger is 1-11-2012 (now agreed).So the new merger will be at 4440-2836=1604 points or 1604/4 = 401 slabs.

3.     From 1-11-2007- the existing rate at which DA is being paid per slab is 0.15%. The  merger will be @60.15% of basic pay (@0.15% per slab *401 slabs)

4.     ACPIN  on 1-11-2012  is 4876

5.     After the merger of 4440 points in Basic pay as on 1-11-2012, 4876-4440 = 436 points or 436/4 = 109 slabs remain .The earlier rate for 109 slabs was @ 0.15%.

In order to balance the merger of DA in Basic pay, the rate for 109 slabs (existing 0.15%) will be scaled down by the same ratio by which the Basic pay has been scaled up.

And the ratio is (2836/4440) = 0.6387

The rate of 0.15%, therefore, converts to 0.10%.

(0.15% *0.6387=0.0958=0.10%) after merger on 1-11-2012

This is how DA rate has been calculated so far in all the previous bipartite settlements.

 

 

 

What is the effect of merging D.A with Basic Pay as on 1-11-2012?

The figures below are hypothetical and explanatory for the purpose of study and have no relationship whatsoever with  the actual basic pay  and other allowances that may be agreed upon during the course of bipartite settlement.

Existing				After the merger (New DA 109 slabs)
Basic Pay	D.A. (old) @76.50% (4876-2836)/4 = 510*.15 = 76.50%	Total	D.A.@ 60.15%	New BP	@ 010% = 10.90%	Total
10000	7650	17650	6015	16015	1745	17760
15000	11475	26475	9022.5	24023	2619	26642

This is the effect of D.A. merger for the purpose of study.

The wage increase in percentage terms is yet to be decided and any % increase agreed upon will be calculated on New Basic Pay, and not on existing Basic Pay.

All benefits such as HRA, , PF CONTRIBUTION, PENSION, etc., are calculated on the basic pay only.

It is very strange to see negotiating union expressing happiness on IBA agreeing to treat 01-11-2012 as the date of effect of the fresh settlement.  As regards the merger of D.A. at 4440 points of ACIPI (Base: 1960=100), IBA has repeated what it had done in 9^th BPS.

 

 

 

 

LET US LOOK AT THE FIGURESWHICH FORTELL TRUTH !

Bipartite	Effective date	Merged DA points	Month up to which DA merged	DA points On the date of expiry of BPS	Left over DA Points
6thBPS	1/11/1992	1148	April -Jun 1992	1148	Nil
7thBPS	1/11/1997	1684	July - Sept 1996	1768	84
8thBPS	1/11/2002	2288	July - Sept 2001	2328	40
9thBPS	1/11/2007	2836	July - Sept 2006	3028	192
10thBPS (Under discussion)	1/11/2012	4440	July - Sept 2011	4876	436
As on date index				5211
Estimated DA    as at 2015				6000

As can be seen only in the 6th bipartite there is full merger of the entire DA in the Basic at 1148 points.This was done to ensure that PF on DA being deducted till such time as part of Pension Settlement. 29/10/1993 is nullified and the concept of PF on DA is given go bye.

 Further in all the later settlements the DA that was merged was one year earlier to the date of the new settlement. Unions & IBA agreed for DA merger with Basic Pay at 4440 index points (DA rate as on Nov.2011 – one year prior to expiry of previous Wage settlement) which was the average DA index ofJul, Aug & Sept 2011, a whopping loss of 436 DA index points of one year till October 2012. Which means 10.84% (taken @ 0.10 post merger rate) DA on New Basic is left uncovered from mergeras on 1st November 2012.

The present DA index is around 5212 (i.e.1303 slabs) less 4440 points(proposed merger) i.e. 1110 slabs (difference of 193 slabs) which would be 19.3 % DA w.e.f. August 2013. If DA is fully neutralized by merger, it would have been a better deal.

 But Unions have failed to ensure DA merger as on the last day of the previous wage Settlement!  With runaway inflation it may not be a surprise that by the time the wage revision is finalized, additional points would have been added with DA index points(June 2014 it is 615.17 points, projected slabs Aug,Sep,Oct 2014 is expected to be 683 from 650  in  May,June,July 2014)

  

That means we may get DA rate on Basic & Pay as it was prevailing at the end of 9th bipartite settlement! Then where is the wage revision? By agreeing to this cut-off date, IBA has not shown any undue favour to us. They have merely conformed to the age old convention followed at the time of each of the earlier settlements.  Therefore, there is nothing to cheer about in this announcement so, in this matter also, there is nothing to celebrate; on the contrary, it’s an injustice.

One can imagine that with around 90% DA rate as on date, with full merger of DA, what wouldhave been the amount that Management would have contributed to PF, Gratuity and leave encashment is any body's guess

The Central govt. employees are demanding merger of DA with Basic once the DA rate crosses 50%. To compensate increasing cost of living 7th Pay Commission has already   been announced for Central Govt. Employees (present DA rate is 90% of Basic)! At the present rate of DA@97.50%for Bank Employees.

During 9th   bipartite we have seen how SBI employees got 6-7% more than the Commercial Bank Employees! While all 5 workmen Unions signed Bipartite to bind all Workmen Employees. It is exclusively its applicable in SBI only

In view of the fact Bankers that because of poor pay Band, new Recruits are shying away from the Bank job. When all other sectors are marching ahead with sizeable wage packet a paltry wage increaseranging made the Banking sector is an unattractive destination.

THEREFORE RATE HIGHER THAN 0.10% HAS TO DEMDNED.

Dearness Allowance Controversy - Part 3

By Pannvalan 

For the sake of some friends who believe and argue what they have brought is gold, not paddy husk, I wish to ask these - 

1. When central government employees could demand and achieve merger of the entire D.A. outstanding as on 31-12-2005 (2642 points) with their Basic Pay for fixing revised Basic Pay with effect from 01-01-2006, why UFBU could not achieve 100% merger of outstanding D.A. at 3028 points, but instead settled for merger of D.A. at 2836 points only, leaving 192 points in the process?  
2.  
3. As I have been repeatedly highlighting, it is the Basic Pay that determines the amount of DA, HRA, Leave Encashment, Pension Commutation, Monthly Pension, Family Pension, Gratuity and most importantly future pay scales.  Then, why did UFBU settle for merger of D.A. at a lower AICPI?  Does anyone have convincing answer? 
5. Even for 10th BPS, merger at 4440 points (vis-a-vis 4876 points) has been accepted by UFBU and without any shame or guilt, our UFBU tomtom that it's a great achievement.  In this case too, 436 points have been sacrificed resulting in a loss of Rs.4,000 per head, per month, on an average.

4.  Similarly, making IBA to commit for implementing revised pay scales and allowances with effect from 01-11-2012 is considered a huge victory.  What is so special or extra-ordinary in this? It is always that way from the beginning. The revised pay scales will be implemented from the day following the date of expiry of the previous settlement.

 

5.  Some of our friends here have conveniently forgotten or cleverly suppressed the fact that even as per 6th CPC, the aggregate of Basic Pay, Grade Pay and Transport Allowance are way above our present Basic Pay and after 7th CPC, things will only worsen, however much increase is shown in 10th BPS. 

6. Finally, bank staff had residual D.A. of 7.20% (i.e.172 points in AICPI - 48 slabs) as on 01-11-2007, whereas at this point, D.A. of central government employees was at 9.00%.  Now, as on 01-07-2014, D.A. of bank staff is forecast at 97.05% or 97.35%, whereas the D.A. of central government staff is forecast at 107%, thus widening the gap gradually from 1.80% to not less than 9.65%.
7.  I remind once again, D.A. for central government employees is paid on the aggregate of Basic Pay, Grade Pay and Transport Allowance.  But, bank staff get their D.A. only on their Basic Pay.   So, both in terms of percentage and in absolute terms, we suffer huge loss.

Now you tell me, who is wiser?