Big update for central government employees. The government has just rolled out plans for the 8th Pay Commission aimed at central employees, which means over 1 crore government workers will see benefits in their pensions and allowances. This news has come as a nice surprise for central government employees as we kick off the new year, and now everyone is curious about how their salaries and pensions will be adjusted. It’s estimated that around 1.2 crore central employees and pensioners will gain from this new commission. But do you know the method behind how their salaries are determined?
The Central Government is likely to announce the creation of the Eighth Pay Commission Committee pretty soon. This committee will consist of a chairman and two members. Once it’s officially set up, stakeholders will present their proposals to the government regarding salary and pension increases for central employees.
Given the current economic climate, it’s anticipated that the Aykroyd formula, similar to what was used in the Seventh Pay Commission, will guide the decisions on salary and pension adjustments for central government employees. First, let’s break down what the Aykroyd formula is and how it influenced the recommendations of the 7th Pay Panel…
What’s the Aykroyd Formula?
The Aykroyd formula was created by nutritionist Dr. Wallace Aykroyd to estimate the basic cost of living. It proposed calculating wages based on the nutritional requirements of an average worker. Aykroyd focused on essential needs like food, clothing, and housing to develop a formula for determining a fair wage.
The 15th Indian Labour Conference (ILC) in 1957 adopted a formula to determine the minimum wage for workers and their families, which includes a spouse and two kids, totaling three consumption units.
The Aykroyd formula focuses on a balanced diet that includes a specific amount of protein and fat, recommending at least 2,700 calories for adults to establish a fair wage standard. It also stresses the need for animal proteins like milk, eggs, and meat due to their high nutritional benefits.
How the Aykroyd Formula was applied in the 7th Pay Commission
The 7th Pay Commission raised the minimum basic pay for central government employees from Rs 7,000 to Rs 18,000, utilizing the Aykroyd Formula. This increase was based on the living costs and nutritional needs at that time.
About a decade ago, the 7th Pay Commission applied a fitment factor of 2.57 to adjust the salaries and pensions of central government employees and pensioners. The pay matrix, which is based on this fitment factor and incorporates the Aykroyd formula, has been in effect since 2016, following the implementation of the 7th Pay Commission’s recommendations.
What to anticipate from the 8th Pay Commission
The Eighth Pay Commission is expected to follow a similar method. The Aykroyd formula will be aligned with updated market data to ensure that salaries reflect the current cost of living.
Reports suggest that the government might select a fitment factor ranging from 1.92 to 2.86. If they go with a fitment factor of 2.86, the minimum basic salary for government employees could rise to Rs 51,480, which is an increase of Rs 18,000 from the current minimum. Likewise, pensions could jump from Rs 9,000 to Rs 25,740.