The Union Cabinet on Tuesday approved the terms of reference for the 8th Central Pay Commission. The 8th Central Pay Commission will be a temporary body consisting of a Chairman, a Member (part-time), and a Member-Secretary. The Commission will submit its recommendations within 18 months from its formation.
Employees expecting significant growth in salary
Following the implementation of the 8th Pay Commission, government employees are expected to receive a significant salary increase. Salaries at all levels will increase, but the exact amount will depend on several factors. It’s likely that, as with previous pay commissions, several allowances may be eliminated or merged with others. This is intended to simplify the pay structure. It’s believed that several allowances, such as travel allowance, special duty allowance, and small regional allowance, may be affected.
During the implementation of the 7th Pay Commission on January 1, 2016, nearly 200 types of allowances were reviewed. Of these, 52 were abolished and the rest were merged. Experts believe this trend will continue under the 8th Pay Commission. This time, the focus may be on increasing the basic salary and dearness allowance and reducing smaller allowances.
How much salary can increase
The salary increase under the new Pay Commission depends primarily on the fitment factor. This is used to calculate the increased salary of employees. The fitment factor applied to the new Pay Commission is multiplied by the basic salary. For example, if the basic salary is 20,000 rupees and the fitment factor is 2.57, then 20,000 x 2.5 = 50,000. This means that the basic salary of 20,000 rupees will increase to 50,000 rupees.
Experts estimate that the fitment factor for the new Pay Commission could range from 1.83 to 2.86. Simply put, salaries could see an increase of 13% to 34%. However, the actual increase will depend on the fitment factor determined by the government when approving the 8th Pay Commission recommendations.
Salary increases also depend on budget allocation. Let’s consider the example of mid-level employees earning a salary of ₹100,000 per month. If a budget allocation of ₹1.75 lakh crore is made, the salary could increase by 14% to ₹1.14 lakh. If an allocation of ₹2 lakh crore is made, the salary could increase to ₹1.16 lakh per month, a 16% increase. Similarly, if a budget allocation of ₹2.25 lakh crore is made, the salary could increase by 18% to ₹1.18 lakh.
