8th Pay Commission Update: The Eighth Pay Commission has just wrapped up another round of discussions. On October 22nd and 23rd, the Pay Commission engaged with employee unions in Mumbai. Before this, the Pay Commission, led by Justice Ranjana Prakash Desai, conducted sessions across several key states and union territories, such as Delhi, Ladakh, Kolkata, and Bengaluru.
Throughout these discussions, many unions have pushed for substantial improvements in the fitment factor, dearness allowance (DA), dearness relief (DR), and basic salary structures. A number of employee unions are seeking system modifications. These proposed modifications involve combining DA with basic salary once a specific inflation threshold is reached and revising how allowances are computed. Let’s take a closer look at what earlier Pay Commissions accomplished.
What Did the 5th, 6th, and 7th Pay Commissions Achieve?
The 5th Pay Commission suggested converting DA into dearness pay once the Consumer Price Index (CPI) rose by 50% above the base index. This dearness pay would be factored into all calculations, including pension and retirement benefits. The Commission also recommended that employees across all salary levels receive 100% inflation compensation via DA.
Meanwhile, the 6th Pay Commission turned down the idea of merging DA into basic salary at any point. The Commission reasoned that the new pay structure already includes regular adjustments to allowances and benefits in response to inflation. Additionally, the Pay Commission kept the current practice of adjusting DA twice yearly rather than quarterly.
The 7th Pay Commission stuck with the current approach to calculating DA. The Commission felt that this method had proven successful over time. As a result, it did not suggest any significant or transformative changes to the overall system and calculation approach.
What to expect from the 8th Pay Commission?
The Federation of National Postal Organizations (FNPO) has demanded that DA should be merged with the basic salary when it exceeds 25%. Meanwhile, the Bharat Pensioners Samaj has demanded that DA and dearness relief (DR) for pensioners should be reviewed every three months instead of twice a year.
It has also suggested that DR should be merged with the basic pension after crossing a certain threshold. It also suggests that the method of calculating the All-India Consumer Price Index for Industrial Workers (AICPI-IW) should be closely analyzed and reviewed. The Pay Commission will now have to take a decision on this.