The Union Cabinet on Tuesday approved the Terms of Reference (ToR) for the 8th Pay Commission, formally setting the stage for a major revision of salaries and pensions for central government employees. Justice (retired) Ranjana Desai will head the panel, which will consult a wide range of stakeholders over the coming months before submitting its recommendations, including the much-awaited fitment factor for pay hikes.
Fitment Factor: What Level 1 Staff Can Expect
According to research reports by Kotak Institutional Equities and Ambit Capital, the fitment factor — the multiplication unit for salary revision — is expected to range between 1.8 and 2.46. Kotak projected a single fitment factor of 1.8, which would raise the basic minimum salary of Level 1 employees, including peons and attendants, from Rs 18,000 to Rs 32,400.
While this suggests an 80% increase in pay, the effective salary hike would be lower, as the Dearness Allowance would be reset to zero. This is usually done whenever a new pay commission is implemented, the report noted. At present, the DA stands at 58%, and along with House Rent Allowance, the overall entry-level salary for Level 1 employees totals around Rs 29,000, implying an effective hike of roughly 13%.
Ambit Capital indicated that under a base-case fitment factor of 1.82, the effective salary hike could reach 14%, while their median-case scenario of 2.15 could raise salaries by 34%. At the upper end, the fitment factor could be recommended as 2.46, which means Level 1 employees could see their basic salary rise to 54%
Range of Salary Hikes for Level 1 Staff
Based on the fitment factors that have been projected by the brokerage, here’s a look at the likely salary hike for Level 1 employees: – Fitment factor of 1.82: Basic salary of Rs 18,000 can rise to Rs 32,760 – Fitment factor of 2.15: Basic salary of Rs 18,000 can rise to Rs 38,700 – Fitment factor of 2.46: Basic salary of Rs 18,000 can rise to Rs 44,280.
However, these figures represent basic pay alone. When combined with the current DA of 58%, HRA, and Transport Allowance, the effective hike will be lower than the headline numbers suggest.
The 8th Pay Commission’s recommendations are expected to have far-reaching implications, particularly for Level 1 staff, including peons, attendants, and support personnel, who have long awaited a substantial pay revision.