Salary Hike– The government will implement the 8th Pay Commission from January 1, 2026. The Pay Commission was approved on January 16, 2025. Meanwhile, the government has been suggested to merge the levels of employees. Also, it is expected that the Pay Commission can implement a fitment factor of up to 2.86.
Due to this, the salary of central government employees can increase from Rs 40,000 to Rs 1 lakh. At the same time, more than 50 lakh central government employees and about 65 lakh pensioners will benefit from the revision of salary, pension and allowances.
The formation of the Pay Commission was approved on 16 January 2025
This commission will assess adjustments in salary and pension. And will focus on important issues like fitment factor and minimum wage standards. Lakhs of employees and pensioners are waiting for the implementation of the 8th Pay Commission. They hope that it will have changes according to today’s economic realities.
On 16 January 2025, Prime Minister Narendra Modi and the Union Cabinet approved the formation of the 8th Pay Commission. However, the government has not yet published the terms of reference for the 8th Pay Commission. However, Budget 2025 has made several proposals for taxpayers. At the same time, the budget documents do not mention the costs to be incurred by the central government in implementing the 8th Pay Commission.
Key Proposals
Advocates who have made the proposal on behalf of the staff have suggested the government to merge several levels. Their suggestion includes merging these levels – Level 1 with Level 2, Level 3 with Level 4 and Level 5 with Level 6. These advocates suggest increasing the salaries of employees in lower pay scales and promoting career growth opportunities.
The target of this merger is to eliminate existing pay rise disparities and create a more transparent salary structure. By combining these levels, it is expected that employees will experience greater growth as it will reduce stagnation and drive financial improvement over time.
At present, the monthly basic salary of a level-1 employee is Rs 18,000. Whereas a level-2 employee gets Rs 19,900. After the merger, level-1 employees can get more benefits. Because the new salary structure will start from this level. Apart from this, it is expected that the 8th Pay Commission can implement a fitment factor of up to 2.86. Due to this, the estimated revised basic pay is expected to increase to Rs 51,480.
Fitment Factor
The fitment factor is an important aspect of the Pay Commission, which acts as a standard multiplier for re-determining salaries and pensions at all levels. This system guarantees consistent salary growth, irrespective of the employee’s grade or salary band.
With the introduction of the 7th Pay Commission, there was a substantial growth in the minimum basic salary, which increased from Rs 7,000 to Rs 18,000 thanks to the fitment factor of 2.57. Similarly, there was a change in the pension as well, which increased from Rs 3,500 to Rs 9,000. Apart from this, the commission introduced a new health insurance scheme for central government employees.
However, the official fitment factor for the 8th Pay Commission has not been revealed yet. Estimates suggest that it could be around 2.5-2.86. This could lead to a significant growth in salary and pension. Potentially, the salary could increase from Rs 40,000 to Rs 1,00,000 depending on the applicable multiplier and grade pay.