In a significant move that signals the government's commitment to its workforce, the Union Cabinet has greenlit the formation of the 8th Pay Commission a full year before the current commission's tenure ends. This landmark decision comes at a crucial time when dearness allowance has crossed the 50% threshold of basic pay, promising to reshape the financial landscape for over 1.15 crore central government employees and pensioners. As the nation moves forward on its path to becoming a 'Viksit Bharat', this proactive step could set new benchmarks for public sector compensation.
A year before the end of the 7th Pay Commission, the Government has decided to set up the 8th Pay Commission, accepting demands of the central trade unions and employees’ organisations. The outcome of the new Pay Commission will benefit about 50 lakh employees and 65 lakh pensioners of the Union government, including serving and retired defence personnel. The announcement for pay commission has come after the dearness allowance went above 50% of the basic salary of central government employees.
Employees and pensioners of the central government are eligible to receive 53% of their base pay as a dearness allowance or relief starting of July 1, 2024. Beginning in January 2025, central government employees and pensioners are entitled to an increase in their dearness allowance or relief. Government workers currently get their pay and benefits based on the 7th Pay
Commission's recommendations. Beginning on January 1, 2016, the Pay Commission's recommendations were put into effect. In the future, the recommendations of the eighth pay commission will be made public. According to experts consulted by ET Wealth Online, central government employees should anticipate an average wage increase based on previous pay commission recommendations.
Approximately every ten years, the central government appoints a pay commission to review employee compensation and decide pension benefits. Therefore, before the present 7th Pay commission expires on December 31, 2025, it was imperative to take early steps to establish rules for central government employees for the ensuing ten years.
PM Modi on X said, "We are all proud of the efforts of all Government employees, who work to build a Viksit Bharat.
The Cabinet's decision on the 8th Pay Commission will improve quality of life and give a boost to consumption." Union minister Ashwini Vaishnaw said that initiating the process a year ahead would allow sufficient time to receive and review recommendations before the 7th Pay Commission’s completion.
What the central government employees can expect?
Krishnendu Chatterjee, Vice President at TeamLease says, “The Last Pay Commission was established in 2016, which recommended the minimum pay jump from 7,000 per month to 18,000 per month with a fitment factor of 2.57 times of basic pay. The maximum ceiling is 2.5 lakhs per month. Considering the inflation factor, there are indications that the fitment factor may stay between 2.5- 2.8 times, which will give a significant boost to employee salaries between Rs 40,000 and Rs 45,000. There are also suggestions of Performance based pay hike which are still under deliberation.”
Rohitaashv Sinha, Partner, King Stubb & Kasiva, Advocates and Attorneys says, " In most cases, pay commissions are set up every ten years to evaluate and adjust central government officials' salaries. The minimum basic salary was raised from Rs 7000 to Rs 18000 using fitment factor 2.57 by the 7th pay commission, which went into effect in January 2016. It is anticipated that the minimum basic wage will rise by an astounding 186% under the 8th wage Commission. This could raise the monthly minimum basic wage to INR 51,480. It appears to have a fitting factor of 2.86. The Central Civil Services (Revised Pay) Rules, 2025 are probably going to be used to make the modifications, which could result in increased pensions and other retirement benefits like EPF, gratuities, etc., as well as suggested wage adjustments.
What is a fitment factor in pay commission recommendations?
Employees and pensioners of the central government have their revised pay determined by a multiplier called the fitment factor. It is a crucial part of the Pay Commission and is used to raise pay and pensions following the implementation of the new commission's recommendations.
The amount of fitment advantage is directly impacted by irregularities in the grade pay assessment and pay band spacing. Numerous stakeholders thus demanded the implementation of a single fitting factor that could be applied consistently to every employee.
How fitment factor in central government salary hikes works ?
The 7th Pay Commission recommended a common fitment benefit of 2.57 to be applied for all central government employees. On the basis of this fitment factor, the minimum basic pay for central government employees increased to Rs 18,000 per month from the earlier basic salary of Rs. 7,000 (2.57 times the basic pay of the 6th Pay Commission).
How central government can calculate salary hike via fitment factor ?
Here is an instance of how central government workers can determine pay increases based on the fitment factor that the 8th Pay Commission announced. Assume that the 8th Pay Commission recommends a fitment factor of 2.5 and that your base pay is currently Rs 40,000 per month. Your base pay will increase to Rs 1 lakh per month as a result. However, as the pay commission usually advises, there won't be a dearness allowance for the first period. As advised by the pay commissions, the dearness allowance is typically applied to the wage in subsequent years. The pay commission may also suggest changes to other allowances.
Key Takeaways for 8th Pay Commission
The announcement of the 8th Pay Commission marks a new chapter in the government's approach to employee welfare, potentially bringing transformative changes to the lives of millions of public servants. With expectations of a significant increase in the fitment factor and basic pay, coupled with the government's proactive timing, the stage is set for what could be the most substantial pay revision in recent history. As the commission begins its deliberations, all eyes will be on how it balances employee aspirations with fiscal prudence, ultimately shaping the future of public service remuneration in India. The outcome of this commission won't just impact government employees' wallets – it could potentially serve as a catalyst for broader economic growth through increased consumption and improved quality of life for public servants.
Feb 07, 2025
TUI Staff
Jan 31, 2025
TUI Staff
Jan 28, 2025
TUI Staff
Jan 21, 2025
TUI Staff
Stay Tuned with The United Indian!
Our news blog is dedicated to sharing valuable and pertinent content for Indian citizens. Our blog news covering a wide range of categories including technology, environment, government & economy ensures that you stay informed about the topics that matter most. Follow The United Indian to never miss out on the latest trending news in India.
©The United Indian 2024