8th Central Pay Commission : The central government recently approved the Terms of Reference ( ToR) of the 8th Central Pay Commission. This clears the way for salary increases for approximately 5 million central government employees and over 7 million pensioners.
The commission will submit its report in 18 months. It is expected that employee salaries will increase by 2027. Learn here about the salary structure of the 8th Pay Commission.
Structure of the Commission
The 8th Pay Commission will be a temporary body consisting of a chairperson, a part-time member, and a member-secretary. It will be headed by Justice (Retired) Ranjan Desai. The commission will submit its report within 18 months. It may also submit an interim report if necessary.
What will the commission consider?
- Economic condition of the country and need for financial discipline.
- Availability of resources for development and public welfare.
- The burden of non-contributory pension plans.
- The financial condition of the states, as the states also adopt the recommendations of the Centre.
- The salaries and perks of public sector and private sector employees will be compared.
Fitment Factor: Basis of pay hike
The Fitment Factor will play a crucial role in the 8th Pay Commission . It’s a multiplier that determines the increase in employees’ basic pay. According to estimates, it could range from 1.8 to 2.57.
If the fitment factor is fixed at 1.8, then…
- Level 1 (Basic Pay Rs 18,000) – Rs 32,400
- Level 2 (Basic Pay Rs 19,900) – Rs 35,820
- Level 3 (Basic Pay Rs 21,700) – Rs 39,060
If the fitment factor is fixed at 2.46, then
- Level 1 – Rs 44,280
- Level 2 – Rs 48,954
- Level 3 – Rs 53,382
If the fitment factor is fixed at 2.57, then
- Level 1 – Rs 46,260
- Level 2 – Rs 51,143
- Level 3 – Rs 55,769
That is, a salary increase of 80% to 157% is possible under the new pay commission.
There will also be changes in allowances
With the implementation of the 8th Pay Commission, dearness allowance ( DA) will be added to the existing basic pay. Additionally, new calculations will be made for house rent allowance ( HRA) and travel allowance ( TA) .
There will also be pension reforms.
The Commission will also provide relief to pensioners. Pension amounts will be increased and equity in pension payments will be addressed. The system for timely pension payments will be streamlined.
New Pay Matrix
A revised Pay Matrix will be introduced under the new Pay Commission , which will make it easier to understand the salary grade and increment structure of the employees.
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