8th Pay Commission- Lakhs of government employees of the country are waiting for the formation of the 8th Pay Commission. Employee organizations are also writing letters to the government for the appointment of the chairman and members of the commission.

However, the government has approved the formation of the 8th Pay Commission in January 2025 itself and it is expected that the salary of government employees will increase from January 2026. The salary of government employees may increase next year, but the fitment factor plays an important role in salary hike. Government employees should do the calculations for this from now itself. They will not have any problem in estimating later.

What is fitment factor?

The fitment factor is a multiplier that is applied to the existing basic pay to determine the new basic pay. It is an important part of the pay commission, which works to change the old pay structure to the new structure. Its main objective is to balance the salary based on inflation, cost of living and economic condition. For example, the fitment factor in the 7th Pay Commission was 2.57. This means that if the basic salary of an employee was Rs 7,000, then the new basic salary was Rs 7,000 × 2.57 = Rs 18,000.

Fitment Factor in 8th Pay Commission: Various estimates are being made regarding the fitment factor for the 8th Pay Commission, which can be between 1.83 to 3.00.

Estimated salary at fitment factor: According to various sources, the fitment factor can range from 1.83 to 2.86 or 3.00. For example, if the fitment factor is 2.86 and the employee’s current basic salary is Rs 18,000, the new basic salary can be Rs 18,000 × 2.86 = Rs 51,480.

The fitment factor applies only to the basic pay and not to the gross salary. Gross pay includes basic pay, dearness allowance (DA), house rent allowance (HRA) and other allowances. Despite a fitment factor of 2.57 in the 7th Pay Commission, the actual pay hike was only 14.3% on average because DA was adjusted to the new basic pay and then made zero. The estimated actual pay hike in the 8th Pay Commission could be between 13% and 34%, depending on the fitment factor and adjustment of DA.

Basic Pay: Basic pay will increase based on the fitment factor. For example a basic pay of Rs 50,000 may become Rs 91,500 at a fitment factor of 1.83 and Rs 1,23,000 at a fitment factor of 2.46.

Allowances: DA, HRA and Travel Allowance will be recalculated based on the new basic pay. DA will be zeroed upon implementation, which may result in actual pay hike being less than the fitment factor.

Pension: The fitment factor will also be applicable for pensioners. For example, the current pension of Rs 22,450 can become Rs 44,900 at the fitment factor of 2.0.

Impact of 8th Pay Commission on Salary

Minimum Wage: The existing minimum basic wage may increase from Rs 18,000 to Rs 21,600 (fitment factor 1.83) to Rs 51,480 (fitment factor 2.86).

Pay Matrix: The 8th Pay Commission will introduce a revised pay matrix, with clear salary slabs for different levels (pay matrix levels). For example, a salary of Rs 18,000 at level 1 could be Rs 32,940 (1.83) or Rs 44,280 (2.46). Whereas, a salary of Rs 44,900 at level 7 could be Rs 82,207 (1.83) or Rs 1,10,554 (2.46).

When will the new salary be implemented

Higher salaries will increase the purchasing power of employees, which will boost consumer spending and the economy. However, this will also increase government spending. The establishment of the 8th Pay Commission has been approved in January 2025, but its terms and conditions have not been released yet. It is expected that it may come into effect from January 1, 2026. However, due to delays, it may slip to 2027.