8th Pay Commission salary revision: In a major relief for about 1.2 crore central government employees and retirees, the Modi government on January 16 announced the approval of the 8th Pay Commission.

On the Union Cabinet’s nod for the next pay panel, Union Minister Ashwini Vaishnaw said that PM Narendra Modi has approved the 8th Pay Commission for the benefit of all central government employees and pensioners.

He also mentioned that since 1947, seven pay commissions have been formed. The 7th Pay Commission came into effect in 2016 and will remain in effect until 2026. Vaishnaw added that there is sufficient time to receive the recommendations and implement them.

He further said that the government will soon appoint the chairman and two members of the panel, which will recommend changes to the pay structure of central government employees.

Government employees, who had been eagerly awaiting this announcement, are now likely to be considering the extent of changes in their pay and allowances.

Also read: Good news for central govt employees! 8th Pay Commission gets Cabinet nod

What would be the expected hike in pensions and salaries for central government staff?

With the announcement now made, the panel, once appointed, will begin its work, having approximately 11 months to submit its recommendations to the government. Among various responsibilities, it will recommend the fitment factor, which will serve as the basis for revising the salaries and pensions of central government employees. In addition to the fitment factor, the panel will also propose other key modalities.

The fitment factor is a key multiplier used to calculate salaries and pensions for government employees.

Under the 7th Pay Commission, employee unions had demanded a fitment factor of 3.68 for salary revision of employees but the government set the fitment factor at 2.57.

Based on the fitment factor revision, the minimum basic pay for central government employees rose to Rs 18,000 per month, up from Rs 7,000, registering a 2.57-fold increase. Likewise, the minimum pension of retirees increased from Rs 3,500 to Rs 9,000. The maximum salary of serving employees was revised to Rs 2,50,000 and the maximum pension was fixed at Rs 1,25,000, taking into consideration the fitment factor of 2.57.

“The pension shall not be less than Rs 9000/- (excluding the element of additional pension to old pensioners) and shall not be more than 50% of the highest pay in Government i.e. Rs 1,25,000/- w.e.f. 01.01.2016…”, said one of the FAQs on pension policy of central civil services.

Also read: 8th Pay Commission: Minimum salary of central govt employees to be raised to Rs 51480?

Though there is no certainty about the fitment factor the panel will suggest after its complete assessment of the economic situation of the employees and the economic conditions prevailing in the country. However, if we go by recent reports the pay matrix is most likely to be prepared taking a fitment factor of 1.92 under the 8th Pay Commission.

The current minimum salary is 18,000, which will possibly be revised to 34,560 with a fitment factor of 1.92. Likewise, the minimum pension might be fixed at Rs 17,280.

The National Council of Joint Consultative Machinery (NC-JCM), a body that addresses issues affecting central government employees in India, recently said that it is expecting a fitment factor of “at least 2.86” for the revision of salaries and pensions.

Based on 2.86 fitment factor, the minimum basic salary of a government employee would go up to Rs 51,480, up from the current minimum salary of Rs 18,000. Similarly, pensions would be hiked to Rs 25,740, up from Rs 9,000, if the fitment factor is fixed at 2.86.

Salary and pension hikes are calculated by multiplying the fitment factor by the previous minimum salary or pension amount.

Conclusion:

While various reports speculate on the potential fitment factor, the union’s demands may hold less significance compared to what the 8th Pay Commission ultimately recommends and what the government finally approves. The accepted fitment factor will serve as the basis for revising salaries and pensions for the staff.