The 8th Pay Commission by the central government is likely to bring about changes to the salary and pension of lakhs of central government employees and pensioners. Although the official notification is still awaited, along with the appointment of chairman and members, discussions on the new pay structure are underway. The fitment factor has emerged as a pivotal discussion point, – a key term that determines how the revised pay be calculated for government employees.
What is the Fitment Factor?
The fitment factor is a multiplier used on an employee’s basic pay to calculate the revised salary and pension. The formula is simple:
Revised Salary = Basic Pay × Fitment Factor
This component allows for the adjustment of salaries to reflect inflation, cost of living, and overall economic status. The government is also discussing the Aykroyd model, developed by Dr. Wallace Aykroyd, to determine fair salaries.
The Aykroyd model calculates wages according to the minimum living costs based on basic needs for food, clothing, and housing, which ensures that salary are paid in accordance with the basic needs for lifestyle and nutrition for the average worker.
Current Pay under 7th Pay Commission
The minimum basic pay under 7th Pay Commission is ₹18,000 for central government employees, and pensioners get a minimum pension of ₹9,000. The maximum salary, for the highest tier for posts like the Cabinet Secretary, is ₹2,50,000.
The 7th Pay Commission follows a fitment factor of 2.57 which is the factor used to revise pay scales. Recently the Union Cabinet approved the Dearness Allowance (DA) and the Dearness Relief (DR) with a 3% hike to make it 58% higher.
At the current rate previous salaries now increase minimum salary from ₹28,000 to ₹28,440 and the minimum pension from ₹13,950 to ₹14,220, which provides minor recourse for salaries to employees and pensions to pensioners.
Potential Salary Under the 8th Pay Commission
Early reports suggest that the 8th Pay Commission may set the fitment factor between 1.92 and 2.08. This will have a big effect on salaries and pensions.
At a fitment factor of 1.92, the minimum basic salary for employees could increase to ₹34,560, while the minimum basic pension for retirees could rise to ₹17,280.
At a fitment factor of 2.08, the figures may go up further to ₹37,440 for employees and ₹18,720 for pensioners.
Key Points to Note
Once the 8th Pay Commission comes into effect, DA (Dearness Allowance) and DR (Dearness Relief) will be reset to zero. Future hikes will be added based on the new pay structure.
The government is currently talking with state administrations about the 8th Pay Commission. The final structure and fitment factor will be announced once the panel is officially formed.
The new pay revision is expected to improve the financial condition of central government employees and pensioners, giving them a more stable and inflation-adjusted income.
For all employees and pensioners, knowing about the fitment factor is very important, as it will decide their base pay and pension for the coming years.