8th Pay Commission: Big news for central govt employees. Right now lakhs of central government employees and pensioners are eagerly waiting for the 8th Pay Commission. The government has also started its preparations, the formation of the panel is under consideration. The biggest question in the minds of the employees is how much their salary will increase and what will be the role of ‘fitment factor’ in this?
This time there are also discussions that while deciding the fitment factor, the existing dearness allowance (DA) will also be taken into account, possibly by merging it with the basic salary. Let us understand what is the fitment factor and what is the real mathematics of salary increase. The fitment factor is a multiplier. When the new pay commission is implemented, the new basic salary is decided by multiplying the existing basic salary by this fitment factor. Its purpose is to ensure that all employees get salary hike on an equal basis and it includes inflation of the previous period (which was received in the form of DA) and a real increase.
For example, understand that the fitment factor in the 7th Pay Commission was 2.57. This meant that the new basic pay of the 7th Pay Commission was decided by multiplying the basic pay (pay in pay band + grade pay) under the 6th Pay Commission by 2.57.
What is the matter of DA merger?
Usually, whenever a new pay commission is implemented, the total dearness allowance (DA) received till that time is merged in the existing basic salary. After this, the first basic salary of the new pay structure is decided on the basis of this ‘revised basic salary’ or by directly applying the fitment factor on the old basic and the DA counter starts again from zero.
What happened in the 7th Pay Commission? By the time the 7th Pay Commission was implemented on 1 January 2016, the DA had become 125%. This 125% DA was subsumed in the old basic pay, and then the fitment factor (2.57) was used to determine the new basic pay.
What to expect from 8th Pay Commission?
DA Merger: It is quite likely that whatever DA (probably above 60%) will be there till 1st January 2026 will be merged into the basic salary.
Fitment factor: Employee unions are demanding a much higher fitment factor (eg. 3.68) than the 7th Pay Commission’s 2.57. How much the government will fix it will depend on the Commission’s recommendations, but it is expected that it will be more than 2.57 (possibly 2.8 to 3.0 or more).
How can your new salary be calculated?
Formulas like “Basic + DA = Fitment Factor” circulating on social media are misleading. The correct way is this:
Determination of new basic pay
New Basic Pay = Existing Basic Pay (7th CPC) * 8th CPC Fitment Factor
This fitment factor itself will include the merger of existing DA and the actual increase.
Example
Suppose your current basic pay (Level 1) = Rs 18,000.
Suppose the fitment factor of 8th Pay Commission is fixed at 3.0 (this is just an example, the actual factor will be different).
Then your new basic pay will be: Rs18,000 * 3.0 = Rs 54,000 (this is for example, the actual figure may vary).