• Tue. Sep 20th, 2022

7th Wage Commission: increase in dearness allowance to no new wage commission – key developments

ByChad J. Johnson

Aug 10, 2022

7th Payroll Commission – Dearness Allowance Hike (Latest Developments): Central government employees are expecting a rise in the rate of dearness allowance for the second half of 2022. Considering the rise in the All India Consumer Price Index for laborers in the industry (AlCPl-lW), a 4% increase in the high cost allowance (DA) and high cost aid (DR) rate is expected by employees and retirees.

The DA/DR rate would become 38% if the government decided to meet the expectation of a 4% increase in DA and DR. However, there is no official announcement yet on the DA/DR rate hike by the central government. Employees and retirees may have to wait a little longer for the official announcement.

According to the Union Ministry of Finance, DA is paid to central government employees to compensate for the erosion of the real value of their salaries due to rising inflation. This rate is revised every 6 months based on AICPI-IW data. As the first six months of this year are over, employees and retirees expect the new DA/DR rate to be announced soon.

In the latest statement, the Union Minister of State for Minister told Parliament that, “in order to compensate central administration employees for the erosion of the real value of their salaries due to the inflation, high cost allowances (DA) are paid to them and the DA rate is revised periodically every 6 months…”

No new wage commission for wage hike

In the meantime, the government has clarified that it is not considering any proposal to establish the 8th Wages Commission to review the salaries and pensions of central government employees and pensioners respectively. Such reviews of the payments made to these employees and retirees can be made by the government at any time, as recommended by the 7th Wage Commission itself.

AD increase based on 7th CPC

Currently, salaries and pensions of employees and retirees of the central administration are provided in accordance with the matrix of the 7th salary commission. The revision of the DA/DR rate is also carried out on the basis of the recommendations of the 7th Salary Commission.