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The implementation of the 8th Pay Commission is eagerly awaited by crores of government employees and pensioners. In the meantime, there is some news that has fuelled their hopes. It suggests that the employees’ salaries can increase between 30-34% which is reported in The Economic Times.
Ambit Capital’s brokerage report states that the raise in the salary and pension will be set at 30-34% which is going to impact about 1.1 crore people. However, the new pay scale is anticipated to be operational from January 2026, although first the report of the Pay Commission needs to be prepared, then it needs to be sent to the government for approval which at this stage, only an announcement has been made. It is still pending on the decision about who will chair the commission and the duration of the chairmanship.
Who qualifies for this advantage?
Approximately 1.1 crore individuals are expected to benefit from the 8th Pay Commission which comprises around 44 lakh central government employees and roughly 68 lakh pensioners. There is expected to be an increase in the foundational salary, allowances, and retirement benefits post-implementation of 8th Pay Commission.
What is the fitment factor?
An important part of fixing new salaries is the fitment factor, which is the number used to multiply the existing basic salary to determine the new salary. For instance, the 7th Pay Commission used a factor of 2.57. It had also raised the minimum basic salary from Rs 7,000 to Rs 18,000 per month. This report indicates that this time the fitment factor could be in the range of 1.83 to 2.46. How much increase will the employees and pensioners receive will be determined to a significant extent by exact number of the fitment factor.
What can be said about the history of salaries and their incremental raises?
The previous pay commissions have indicated salary increases at different increments. The 6th Pay Commission of 2006 implemented an increase of almost 54% on total salary and allowances. Thereafter, the 7th Pay Commission came into effect in 2016 which implemented a raise of 14.3% on the basic salary and showed an increase of about 23% in the first year after other allowances were added.
What are the components of salary?
A government employee's salary comprises of basic salary, dearness allowance (DA), house rent allowance (HRA), transport allowance (TA) and some small perks. Over time the basic salary’s contribution decreased from 65% to 50% and the share of other allowances increased even more. All these together form the monthly salary. Retired employees will also see similar trends. However, any HRA or TA won't be provided.
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