Wage Revision Dilemma: How Do You Calculate the Load Factor with Merged Allowances?

I am working in an organization where wage revision for the employees is due. Can anyone please tell me how the "load factor" is to be arrived at in the new pay scales after merging dearness allowance to some extent in the previous pay scales?

Regards

Dear Ajeet Kumar,

For Central Public Sector Undertakings, there is a guideline from the Department of Public Enterprises under the Ministry of Heavy Industries regarding wage revision effective 01.01.2010.

As per the above guideline, the Industrial DA as of 1.1.2007 will be merged with the basic as of 31.12.2006.

The DA corresponding to AICPI on 1.1.2007 is 68.8%, and after a 50% DA merger (as per DPE direction), it is 78.2%.

The maximum fitment benefit on the above basic+DA is 30%. In the normal case, (basic+DA) x 130% will be the revised scale. Annual increment will be 3% of the new basic.

DA on 1.1.2007 will be zero. Instead of the base points of 1708 (base 1960) towards AICPI, the new base points will be 2884. The revised DA will be calculated as enhanced points/base points x 100.

For example, on 1.10.2010, the average AICPI is 4033.

In the pre-revised scales, DA is calculated as follows:

Base points - 1708
Enhanced points - 4033 - 1708 = 2325
DA = Enhanced points/base points x 100 = 2325/1708 x 100 = 136.1%

In the revised scale, DA will be as follows:

Base points - 2884
Enhanced points - 4033 - 2884 = 1149
DA = Enhanced points/base points x 100 = 1149/2884 x 100 = 39.8%

I don't know what a load factor is. Please explain.

Abbas.P.S

Dear Abbas,

Thank you for the valuable information. Regarding "Load Factor," it is submitted that it is an additional burden in the new pay scales to be borne by the organization. For example, if my pay in the pre-revised scale is Rs. 100 and DA is Rs. 40. After merging a certain portion of DA in the pre-revised pay, let's say Rs. 30, the total comes to Rs. 130 in the revised pay. On this Rs. 130, DA of the balance Rs. 10 shall be paid. This is not a revision of the pay scale. The organization then adds, let's say Rs. 70 to the scale, which increases your pay to Rs. 200. Now, on the Rs. 200 pay, the balance DA will be calculated. This Rs. 70 is an additional burden to be borne by the organization. Therefore, it can be said that the additional burden arising on account of the revised pay scale is called the "Load Factor." I believe it is clear now.

I feel that the Load Factor is equivalent to the fitment benefit as cited above by me.

Regards, Abbas P.S