8th Pay Commission: The central government recently approved the Terms of Reference for the 8th Pay Commission. This commission reviews the salaries of central government employees and the pensions of retired employees. It is now clear that the wages, pensions, and allowances of government employees will be reviewed again. According to media reports, the 8th Pay Commission may be implemented from January 1.
However, an official announcement is yet to be made. It is estimated that the recommendations of the new Pay Commission will be implemented from January 1, 2026, resulting in a direct increase in the pockets of 5 million employees and 7 million pensioners.
Every 10 years, the government forms a new Pay Commission to adjust employee salaries in line with inflation and economic changes. This time, the 8th Pay Commission will specifically focus on minimum pay, fitment factor, dearness allowance, and service conditions.
What will the 8th Pay Commission increase?
The implementation of the 8th Pay Commission may also increase several allowances, including house rent allowance, travel allowance, education allowance, and medical allowance. It is believed that a significant increase in employees’ basic salaries is possible.
The 7th Pay Commission recommended a uniform fitment factor of 2.57, but the actual salary increase it provided was only 14.3%. However, the 2.57 fitment factor of the 7th CPC has grabbed all the headlines. Data from the previous Pay Commission report shows that the actual salary increase under the 7th CPC was much lower, expressed as a percentage decrease, than the last increase under the 6th Pay Commission.
The 6th Pay Commission recommended an actual salary increase of 54%, while the 7th Pay Commission provided an actual rise of only 14.3%.
| Pay Commission | Real Increase (%) |
|---|---|
| II CPC | 14.2 |
| III CPC | 20.6 |
| IV CPC | 27.6 |
| V CPC | 31.0 |
| VI CPC | 54.0 |
| VII CPC | 14.3 |
How does the 7th CPC calculate the 14.3% real pay increase?
The Seventh Pay Commission stated that to determine an employee’s pay in the new pay structure, the basic pay (pay in the pay band + grade pay) at any level as on 01.01.2016 must be multiplied by 2.57. “Of this multiplier, 2.25 represents the basic pay plus dearness allowance (DA), which is considered to be 125 per cent as on 01.01.2016. The actual increase is 14.2 per cent (2.57 ÷ 2.25 = 1.1429),” the Seventh Pay Commission stated in its report.
Currently, the DA for employees is 58%, but when the 8th Pay Commission is implemented, the DA will reset to 0% as soon as the new basic pay is implemented. This means that the DA added to the current salary will be merged into the new basic wage. Every six months, the government will increase the DA based on inflation. If the new basic wage is ₹45,000, the increase will be ₹4,500 at 10% DA and ₹9,000 at 20% DA.