Central government employees and pensioners are eagerly looking forward to updates regarding salary and pension reformation as the 7th Pay Common nears its end. Discussions over the next pay panel are gaining momentum since the 7th Pay Commission will retire in January 2026, completing its 10-year term. Traditionally, a pay commission is formed about once a decade to review and adjust salaries and pensions of government employees as well as retirees.
Formation And Role Of Pay Commissions
The government led by former Prime Minister Manmohan Singh set up the 7th Pay Commission in February 2014, which came into effect from January 2016. This pay commission made an enormous recommendation which led to the fitment factor going up to the average of 2.57 times so that the current lowest pay payable for the central government employees became Rs 17,990 from Rs 7,000.
A high-scale commission will directly help to tackle a major issue of financial concerns of government servants. After the appointment of the commission, it will interact with all stakeholders, study the existing pay scales, and send proposals to the government. Though the 7th Pay Commission was constituted without delay, the constitution process of the 8th Pay Commission is yet to happen with the growing demands of employees’ unions and the stakeholders.
Fitment Factor Expected Changes
Key pay commissions have followed fitment factors for the adjustment of basic salaries and pensions. The fitment factor is to be added to the pay and pension scales to achieve new values. The 2.57 fitment factor used in the 7th Pay Commission has considerably improved the salaries and pensions. However, a fitment factor of 3.67 had been sought by the employee's union itself.
While the minimum basic pay for a government employee is likely to rise multi-fold with the introduction of the 8th Pay Commission, it is expected that a fitment factor of 2.86 might do the trick. Of course, this means not just the various benefits, such as non-practicing allowance, house rent allowance (HRA) and so on, but even the bare-bones minimum basic pay will be hiked from the current Rs 18,000 to as much as Rs 51,480.
Meanwhile, pensions are expected to rise to as much as Rs 25,740 from the present Rs 9,000. These, of course, are just some of the changes that exemplify how fitment factor can change everything for one employee’s personal wallet.
According to the National Council of Joint Consultative Machinery (JCM) secretary Shiv Gopal Mishra, at least a fitment factor 2.86 percent is what the central government union has been anticipating.
That is what most of the central government employees have been expecting regarding their desired financial up-gradation. This announcement has left many of the applicants in many sorts of suspense because most of them were expecting more news on their employee's demands.
Delay In Composition And Employees’ Demands
Much to widespread expectation, the government has not issued a notification so far to set up the 8th Pay Commission. In the first quarter of this year, the staff side of the National Council of JCM did draw attention three times to the fact that the process was unnecessarily delayed. The first memorandum was presented to then Cabinet Secretary Rajiv Gauba in July 2024 during the presentation of the Union Budget. Another memorandum was presented to T.V. Somanathan, who succeeded to Gauba during August.
This reflects increasing anxiety among employees regarding delays in forming the pay commission. Many of them were expecting some announcement in this regard in the Union Budget for 2024-25. As
expected, nothing was in store for them. Employees and pensioners were left on tenterhooks once again.
Financial Impact On Employees And Pensioners
It impacts more than just individual salaries and pensions. The true reach of a reconstituted pay commission goes into the general economic framework by adding to the disposable income – the amount left to individuals to spend after deducting basic expenses – which may boost consumer spending. This also has a cascading effect on the economic activity as central government employees make up a large section of the workforce.
With the 8th Pay Commission, there is a strong possibility that the improvement in a lot of employees would show on a large scale. For instance, the minimum wage now pegged at Rs 17,990 will more than double, which means there will be a tremendous boost to purchasing power. Similarly, the pensioners whose minimum pension had been about Rs 9,000 are now set to rise to Rs 25,740, thereby bettering their standard of living.
Way Forward
The 7th Pay Commission is coming to an end, and central government employees and retirees are hopeful that the 8th Pay Commission will be formed. Its formation was delayed, and it is surrounded by misgivings. Employees and pensioners continue to be hopeful over a speedy settlement so that their pay and pension reach the economic realities of today.
