The Union Cabinet, led by Prime Minister Narendra Modi, has approved the establishment of the 8th Central Pay Commission (CPC) to revise salaries and allowances for approximately 50 lakh central government employees and 65 lakh pensioners. The appointment of the chairman and members is pending, with expected terms of reference (ToR) finalization by April 2025. Key proposals include restructuring pay and allowances, incorporating Dearness Allowance into Basic Pay, and considering family units of five for minimum salary calculations. The current salary framework, based on the 7th Pay Commission from 2016, may also see an increase in the fitment factor, potentially raising employees’ basic pay significantly.
8th Pay Commission: The union cabinet, led by Prime Minister Narendra Modi, approved the establishment of the 8th Central Pay Commission (CPC) last month, aimed at revising salaries for approximately 50 lakh central government employees and allowances for 65 lakh pensioners. While there is significant interest in the potential salary increases and other adjustments, the government has yet to appoint the chairman and two members of the CPC. Although names may be revealed soon, the primary focus remains on the terms of reference (ToR) that will guide the CPC’s work. Reports indicate that the ToR is expected to be finalized by April 2025.
The National Council – Joint Consultative Mechanism (NC-JCM), which serves as the official forum for resolving conflicts between the central government and its employees, has already submitted proposed ToR for the Commission. Secretary (Staff side) Shiv Gopal Mishra is requesting a meeting of the standing committee to formally consider the proposal.
Key areas of focus in the 8th Pay Commission:
Pay and Allowances restructuring
In addition to reviewing and revising the salary framework for all central government employees, reforms to the Modified Assured Career Progression (MACP) scheme have been suggested. If approved, this could guarantee at least five promotions during an employee’s career.
Dearness Allowance (DA) and Interim Relief
There have been longstanding demands to incorporate the Dearness Allowance (DA) into the Basic Pay. Additionally, central employees are seeking interim relief until the new Pay Commission is implemented.
Increase family units
In conversations with NDTV, Mr. Mishra emphasized that the 8th Pay Commission should establish the minimum salary considering a “five units” consumption requirement rather than the current three. This adjustment is important as an earning individual often carries the responsibility of their dependent parents, he noted.
“Caring for aging parents is both an ethical and legal obligation under the Maintenance and Welfare of Parents And Senior Citizens Act 2022, which is why family units should be recognized as five instead of three,” he stated.
Factor in modern expenses
Mr. Mishra also highlighted that the Aykroyd formula, designed to calculate wages based on the cost of living and nutritional needs of an average worker, dates back to the 20th century and does not account for contemporary expenses. Developed by Dr. Wallace Aykroyd, a nutritionist, this formula has become outdated.
“For instance, in today’s digital age, there is an emphasis on transitioning to digital platforms. However, the Aykroyd formula fails to recognize the expenses associated with internet access,” he remarked.
Also Read | Centre Approves 8th Pay Commission To Revise Salaries, Pension Allowances
How much salary hike to expect?
At present, central employee salaries are governed by the recommendations of the 7th Pay Commission, which took effect in 2016. The forthcoming salaries will be influenced by the ‘fitment factor’—a multiplier applied to the current basic pay.
Reports indicate that this fitment factor may increase from the current 2.57 to 2.86, potentially elevating the basic pay in Level 1 from Rs 18,000 to Rs 51,480. Consequently, employees across all 10 levels will experience a revision in their salaries and pensions.