8th Pay Commission Update: If you are a central government employee, this news could be very significant for you. Following the demand to implement the 8th Pay Commission, employee organisations have also called for a revision of the “family consumption unit” calculation. These organisations argue that determining the minimum salary based on the current three-unit model fails to reflect modern-day family expenses; instead, they propose calculating the family unit based on five units. If this demand is accepted, it could substantially affect both the minimum basic salary and the fitment factor.
What is the Family Factor?
Simply put, the “family factor” assesses a family’s size and associated needs, which serves as the basis for determining the minimum salary. Employees do not merely cover their own expenses; they also bear the responsibility of meeting their family’s needs. The 7th Pay Commission used a three-unit family model to determine the minimum salary.
Employee organisations argue that this model did not adequately reflect the responsibility of caring for parents. Consequently, for the 8th Pay Commission, they are demanding a shift to a five-unit model, emphasising that an employee’s actual family responsibilities should be given greater importance when fixing salaries.
Why are employees demanding a shift from 3 to 5 units?
Employee organisations have pointed out that many government employees today bear the financial responsibility for their parents. Therefore, limiting the assessment of family needs to just the employee, their spouse, and their children is insufficient. The NCJCM has formally requested the 8th Pay Commission to calculate the family unit based on five units.
Meanwhile, organisations such as AIDEF, AINPSEF, and FNPO have also backed the demand to increase the family unit count. According to the All India New Pension Scheme Employees Federation (AINPSEF), an employee’s dependent parents should be included in the family consumption units, as caring for them is also a financial responsibility.
How much will the minimum salary increase if the 5-unit model is adopted?
It is worth noting that the demand to increase the family unit count could have the most significant impact on the calculation of the minimum basic pay. Calculations performed by AINPSEF reveal that the basic salary for a Level 1 employee under the 7th Pay Commission is set at ₹18,000. Adding a 58% Dearness Allowance (DA) to this amount results in an additional ₹10,440.
This implies that the combined total of the basic salary and DA amounts to ₹28,440. If the basis for calculation shifts from the current 3 family units to 5 units, the calculated figure would rise to ₹47,400. Consequently, the minimum salary could reach approximately ₹48,000. Based on this calculation, a fitment factor of roughly 2.66 is estimated.
Will employees with larger families receive a higher salary?
However, increasing the family unit count from 3 to 5 does not automatically mean an employee with a larger family will receive a higher basic salary. The family unit serves as the basis for calculating the minimum salary. If the minimum salary is determined using 5 units as the benchmark, it will directly impact the salary structure. This change would also benefit those with larger families. Once the minimum basic pay is established, it can be fully implemented across the salary structure.