The Union Cabinet has approved the formation of the 8th Pay Commission to revise the salaries of over 50 lakh Central government employees, Union Minister Ashwini Vaishnaw said on January 16, 2025. The announcement comes just days before the 2025 Union Budget. Along with revision in the salaries, the implementation of the recommendations of the commission will also impact the Dearness Allowance (DA).Vaishnaw said that the commission will likely be formed soon, and its recommendations will come into force on January 1, 2026.
Also read | How much salary hike central government employees can expect, how to calculate it
Increase in 8th Pay Commission salary
The exact percentage of the salary hike under the 8th Pay Commission is yet to be disclosed. While it will be speculative at this stage to tell the exact hike in salary which central government employees will get, however, the recommendations of the past commissions can give us a broad idea about overall impact.
The most critical aspect of a pay commission is the fitment factor. It is the key multiplier used to determine the revised salaries and pensions, which will play a significant role in the hike.
What is Fitment Factor?
The fitment factor is used to calculate the revised basic salaries and basic pensions for government employees. It serves as a critical component of the Pay Commission’s recommendations. The revised basic pay is determined by multiplying the current basic pay with the fitment factor.
Also read | Pension in 8th Pay Commission: How much hike pensioners can expect, will there be a change in UPS?
Salary and pension hike in 7th Pay Commission
The 7th Pay Commission’s fitment factor was 2.57, meaning that central government employees’ and pensioners’ base pay would be multiplied by 2.57.Salary hike
The 7th Pay Commission introduced significant changes for Central government employees and pensioners. It recommended a minimum basic salary of Rs 18,000, marking a substantial increase from the previous Rs 7,000. A fitment factor of 2.57 was applied to revise salaries, ensuring a uniform hike across pay levels. The commission conducted a comprehensive review of the pay structure, allowances, and pensions, addressing various aspects of employee compensation. Additionally, it introduced a health insurance scheme for both employees and pensioners, enhancing financial security for medical expenses. For pensioners who retired before January 1, 2016, the pension formulation was also revised to ensure equitable adjustments.
Pension hike
Under the 7th Pay Commission, the minimum basic pension is Rs 9,000 at present, which was raised from Rs 3,500 in the Sixth Pay Commission.
Salary and pension hike in 6th Pay Commission
The base pay of central government employees and pensioners increased by up to 1.86 percent under the 6th Pay Commission as the fitment factor was 1.86.
Salary hike
It recommended a minimum basic salary of Rs 7,000, a notable increase from the previous Rs 2,750 in 5th Pay Commission. The fitment factor, initially proposed at 1.74, was later increased to 1.86 by the government, ensuring higher revisions in salaries. The revised pay was made effective from January 1, 2006, while allowances came into effect from September 1, 2008. Additionally, the commission increased the cost of living allowance from 16% to 22%, addressing inflation and enhancing the financial well-being of employees.
Pension hike
Under the 6th Pay Commission, the minimum basic pension for Central government employees was increased from Rs 1,275 to Rs 3,500 per month.
PM Modi said on social media platform X on January 16, 2025, “We are all proud of the efforts of all Government employees, who work to build a Viksit Bharat. The Cabinet’s decision on the 8th Pay Commission will improve quality of life and give a boost to consumption.”
— narendramodi (@narendramodi)
How central government employees can calculate salary hike via fitment factor
Here is an example to understand how central government employees can calculate salary hike on the basis of fitment factor announced by the 8th Pay Commission. Suppose your basic salary is currently Rs 40,000 per month and 8th Pay Commission has recommended a fitment factor of 2.5. On the basis of that, your revised basic salary will be increased to Rs 1 lakh per month.
How to calculate salary hike using Fitment Factor?
To understand the salary hike, consider this example:
Current basic salary: Rs 40,000/month
8th Pay Commission fitment factor (hypothetical): 2.5
Revised basic salary: Rs 40,000 × 2.5 = Rs 1,00,000/month
The actual fitment factor will be announced when the 8th Pay Commission releases its recommendations. This decision is anticipated to significantly enhance the financial well-being of Central government employees and stimulate economic activity through increased consumption.
