At present, government employees have a pay package that includes both a cash salary and perquisites.
Apart from a cash component, pay packages of most government employees also include a number of allowances as well as various benefits such as housing, transport facilities, telephones, leave travel allowances, pension benefits and rations.
The study is a part of a bigger study, which aims to estimate the total cost incurred by the government in compensating its employees in the form of cash, allowances and other benefits. It is being carried out by the Xavier Labour Relation Institue (XLRI), Jamshedpur, and is expected to be completed within four months.
If the government decides to accept such a proposal, the impact on its finances will be tremendous.
Only an increase in the cash salaries of its 5.5 million employees is expected to hike the government's annual salary bill by about Rs 20,000 crore, considering that the financial impact of the previous Commission was Rs 17,000 crore. The Central exchequer is expected to pay about Rs 41,557 crore only to its civilian employees in 2006-07.
The sixth pay commission is also examining other possibilities to change the pay and pension structure for Central government employees. It is also studying the feasibility of a performance related pay structure as well as looking up new pension schemes to in order to reduce the government's liabilities towards terminal benefits of its employees.
It is expected to give its recommendations by early next year.