 Hello and welcome to NewsClick. Today we have here with us Mr. KK and Kutty, the President of Confederation of Central Government Employees and Workers. We are going to talk here today regarding the Social Security issues and also the Minimum Base Issue. Welcome to NewsClick, Mr. Kutty. Thank you. We hear a lot about all the things that Central Government has been doing to whittle down the Social Security benefits of its employees. Can you tell us a little about it? Yeah, they started that exercise in 2004 exactly. When the NDA government was in power, they introduced the provisions of attacking the Social Security system of pension through their budgetary proposals. Then they introduced a bill in the parliament. That bill was to switch over from a defined benefit pension scheme which was invoked in the government sector to a contributory pension system. At that point of time they say that the reason why they switch over that they are making is because the financial outflow that the government has to do, that has been increasing year by year. Over the years it has reached a particular stage which the government cannot bear the expenditure. Basically it was actually not by their own finding. It is at the instance of the International Monetary Fund who were spearheading that what type of economic policy our government should have in this country. Now all those employees who have been recruited after 11 2004 are now covered by the new scheme. The differentiation of these two schemes is one is a defined contribution that is the new scheme. Your contribution is defined that you have to pay this much for if you have to get a pension. Presently it is 10% of your salary and the government will contribute 10% of salary that will be the government's expenditure part of it or government's obligation. This amount when they are collected it is supposed to be kept in a mutual fund and the mutual funds can invest in certain portfolios which the government has decided now that in what manner it has to be deployed. Whatever return that comes from out of that portfolio investment that will have to be utilized for the purpose of paying an annuity to the retired personnel after their retirement. A portion of it of course will go to them in a lump sum that portion has also been decided by them that 40% will be utilized for the purpose of generating the annuity and 60% will be given back to them to the employees. These are the new system functions. Now when it goes to the mutual fund and when they invest it then the return is depending upon the performance of the organization in which you have invested these funds. If it goes bankrupt then naturally these employees get nothing out of that whose funds have been invested over them. It is a very fortuitous operation. It is only a thinking that over the 40 year period the funds is going to generate a huge amount and from that you will get a very sizable or significant amount of funds in that. We have made an analysis of that on the basis of the own projection that that bill was called the PFRDA bill. It became an act later because during the UPA government period in collaboration with the then opposition party that is BJP they joined together to pass that bill because UPA one could not pass that bill because the left party is totally opposed to the introduction of the bill because that was totally against the workers. So they did oppose it and because of that they couldn't pass it. We made an example to the government very recently that a person who is recruited to the civil service or as a civil servant or who has an IAS or an IRS officer in 2003 December let us assume somebody is joining and another joining in 2004 January. Once they retire after 30-35 years of service with the retire their pensionary benefit will vary. If the person who is retired in prior to 2004 will get 300 rupees the man who is covered by the contributory scheme will get only 100 rupees. Three times was the difference that that comes about and when it goes to 20 years it will be seven times and when it goes to 30 years another 30 years if it is there then it will be the difference will be even more than 15 or 16 times. This is what exactly when we say whittling down the things. And even today if we look at it whether the government has really got their financial outflow curtailed because of this particular system that was introduced we even challenged that at that point of time that is not going to reduce the government's expenditure at least for the person. Then they appointed a commission you know the sixth pay commission was appointed and they appointed a committee which was actually headed by the Indian Institute of Social Sciences in Bangalore. One Dr Gayatri was the chairman of that group she submitted a report and in her report she has very categorically stated that for the next 40 years government's finances is not going to have any impact over this matter rather the outflow for the government will be much more than what it was in 2003 or what it had been all these years. So in fact it did not serve any purpose neither it did not go for the for the reducing the fiscal deficit nor has it gone to help anybody if I am retiring today with a salary of 20,000 or 30,000 rupees I will get from the next month onwards after retirement 15,000 rupees as my this thing and it is also cost indexed that whenever the prices increase my pension will also increase according to the way as we are giving to the employees on the basis of what we call the dearness compensation that is applicable to the pensioners also. None of these things will be applicable for the new contributory system this is what exactly happened as far as the pen social security of the of the better organized section of the working class in India is concerned. We've also heard that the pensions of workers government is planning to invest in the stock market so what is it's going to be? Government is already invested government has no other way of doing it government is investing every fund which they are collecting whether it is from the unorganized sector or from the organized sector because all these things will go to this this nominated mutual fund agencies and they will decide where it has to be invested their investment decisions will the will be the what I say will be that that whatever consequences that happens it is a good decision bad decision that consequences will not be borne by the mutual funds it will be borne by the person who contributed that is even the persons from whom the government has called has collected the contribution. What has been the experience of other countries especially considering the 2008 financial crisis? Even in America today it is not a hundred percent investment in stock market whereas we are now attempting upon a 100 percent total pension fund that is going to go to the stock market only they have at least understood the vagaries of stock market and they have not done it fully but they have done it substantially substantial figure because the entire boom that could take place in American economy what we call the ergonomics that has risen only because of this that because of this this fund which is of which are which are you are going to get it almost free is going to be invested corporate are getting the funds without much of an effort at all. We can give one example about it that when the NRON ultimately failed that is prior to even 2008 when it became bankrupt the entire workers who are employed there they lost their pension fund also they lost their pension also nothing of that so they could get it in fact one of the reasons for the 2008 global financial crisis at least in America live aside the derivatives and all other things which they have done it is also the utilization of the pension fund to such type of things investment portfolio that is the reason so so many countries have adopted it and whoever has done it they have gone into difficulties Argentina has is one country which has reversed back they have gone back to the defined benefit pension scheme you know in the initial stages even the civil servants some of them really felt genuinely they felt that that will benefit them they will get them much more what is a pension than what they are getting because they looked at the stock market and its boom that takes place and they say that this is going to be a permanent phenomenon but now they have started realizing that's not going to be a permanent phenomenon in fact it can never be a permanent phenomenon the downward trend will be a permanent phenomenon that they now begin to realize including the what is a senior officers of the government of India or their organizations every one of them have realized it and it is their calculation which they say that they will get only one third of the pension which their colleague is going to get if they would have been in defined benefit pension scheme one of the demands of central government workers has been that the minimum wage should be raised to 26000 rupees per month and and and also right now workers all over India demanding a rise in minimum minimum wages so can you explain to us how how this minimum wages is arrived at and you know how you made the calculation of 26000 rupees the cry for a for a for a minimum wage that arose in the post independent era so it was discussed naturally in the Indian labor conference which is one one of the forum were the government the representatives of the employing class and the workers all of them were were present so the question of minimum wage nobody nobody objected everybody agreed that yes it has got but then how to quantify it so a committee was appointed and the labor conference went into that matter and Dr. Icroyd became the chairman of that particular committee which has to go on into the quantification or computation of the minimum wage or what we call the need-based minimum wage he identified a 14 basic requirement of a human being to exist that includes clothing that includes his food that includes the certain amount of calories of energy that a person has to has to have if he has to function at the end of it he gave the report that this is the position the government tried to whittle down even that particular thing also but anyhow that has been the accepted norms today which is now presently known as the Dr. Icroyd formula which says that you have to take the the prices of these commodities these 14 commodities certain the family was also defined it is not only the individual worker he has to naturally protect the interest of his family then again this conversion of this quantum of requirement into money terms was made money terms was you have to find out what is the retail prices of these commodities and then multiply it with the requirement of that particular family unit this is how the minimum wage was calculated this calculation was taken place in 1957 before every commotion the government employees have said that you kindly fix the minimum wage and then according to the requirement strata whatever the structure of these things you can fix the salary of each and every individual on the basis of a proportion or a ratio or whatever it may be you also fix the maximum wage what should be the minimum and maximum then minimum and maximum there was an understanding that was reached into in 1973 that the maximum salary should not exceed beyond 10 times of what the minimum salary you are going to give but neither the second third fourth or fifth commission could recommend that this minimum wage on the basis of i-croyd formula should be evolved and the only reason they have stated is that yes we have calculated it but we are unable to recommend it because taking into account the size and the the the state of affairs of the economy of the country we cannot recommend that rise because that rise will increase an outflow of a greater dimension and therefore only on the basis of what we can call it as capacity to pay this particular demand was not accepted in the fifth pay commission that was appointed in 1994 95 then they gave their report in 1998 by the time the new liberal policies have already come into being between 91 to 98 they are also the same demand was placed but they refused even to compute that particular they advocated a very very strange theory they say that increase in the wages can only be depended upon or it should be related to the growth in the economy of the country so they made a calculation between 1983 to 1993 what was the growth that has been registered in the country the overall economic growth and on that basis they say that we will finalize the minimum that means that much of increase was given from the given minimum wage to the new minimum wage which they were found which they were to decide so that way it was arrived at in the sixth pay commission we gave again this demand that it should be on the basis of minimum wage they of course computed the minimum wage and they made that their salary will be based upon that but it was a totally irrational computation which nobody could agree and the very same thing was repeated by the seventh pay commission they say that we will go exactly according to the doctor I cried for but what is the point of dispute is that the retail prices of the 14 commodities which you took it was an imaginary figure it is totally diverged from the reality we have given the figure as it was obtaining in 17 2014 to the government government took it the commission took it of 17 2015 and they took only from the website of the labor institute on the basis of which we are today getting the dearness elements if that has to be depended upon then no wage revision is required to be done because we are getting the dearness elements on that basis so why there should government has got another website which is maintained by the agriculture ministry where the retail prices of all commodities are given in their website we quoted that we said look here you take your own website and if you calculate it it will come to 26 000 rupees we again suggested to them that the government of Andhra Pradesh has set up a pay commission in 90 in 2013 they gave a report they have computed the minimum wage or the retail prices in 2013 we are not saying that that is perfectly right but at least you take that even if you take it and make adjustment to that make it applicable to 2016 then also it will come to beyond 26 000 rupees to tell very frankly they do not have an argument to counter attack and because of that they stubbornly took the position that whatever the pay commission recommended will not go beyond that is the situation do you think the reason why the government is not willing to increase the minimum wage to a living wage do you think is there any pressure of the private sector and the corporate sector behind it naturally because private sector does not want the wages to be increased corporate profit is today depending upon the suppression of the wages because any one of the ingredients that goes into their profit making that can never be suppressed other than the wages so the wages are being suppressed if the wages in one sector in the economy increases then the clamour for such a parity or such a type of increase in other sector cannot be cannot be all that you cannot persist it for all time to come what is exactly happening today in the corporate sector is that they give a huge enormous amount of wages to the upper strata of their functioning workers and to the lower strata they give patents of the money which has absolutely no basis because we have such an unemployed situation in the country so they wanted to exploit that situation that is why they wanted to come to our country where poverty is at the extreme and therefore they will get a poor people to work and that is the only methodology in which they can maximize their profit so they will make enormous amount of pressure on the government to see to it that the wages never increases at any place thank you Mr. Kutty thanks for coming here for the thank you please keep watching NewsClick