The recommendations of the 8th Pay Commission will have a big impact on the salaries of government employees. Fitment factor is the most important basis for salary increase, which decides the new salary by multiplying the basic pay. In the 7th Pay Commission it was 2.57, while in the 8th it is likely to be between 1.83 to 3.00. This will lead to a significant increase in basic pay and pension.

8th Pay Commission: Lakhs of government employees of the country are waiting for the formation of the 8th Pay Commission. Employee organizations are also writing letters to the government for the appointment of the chairman and members of the commission. However, the government has approved the formation of the 8th Pay Commission in January 2025 itself and it is expected that the salary of government employees will increase from January 2026. The salary of government employees may increase next year, but the fitment factor plays an important role in salary increase. Government employees should do the calculations for this from now itself. They will not have any problem in estimating later.

What is the fitment factor?

The fitment factor is a multiplier, which is applied to the existing basic pay to determine the new basic pay. It is an important part of the pay commission, which works to change the old pay structure to the new structure. Its main objective is to balance the salary based on inflation, cost of living and economic condition. For example, the fitment factor in the 7th Pay Commission was 2.57. This means that if the basic salary of an employee was Rs 7,000, then the new basic salary was 7,000 × 2.57 = Rs 18,000.

Fitment factor in the 8th Pay Commission: Various estimates are being made regarding the fitment factor for the 8th Pay Commission, which can be between 1.83 to 3.00.

Estimated Salary at Fitment Factor: According to various sources, the fitment factor can range from 1.83 to 2.86 or 3.00. For example, if the fitment factor is 2.86 and the existing basic pay of the employee is Rs 18,000, the new basic pay can be Rs 18,000 × 2.86 = Rs 51,480.

Actual pay hike

The fitment factor applies only to the basic pay and not to the gross salary. Gross salary includes basic pay, dearness allowance (DA), house rent allowance (HRA) and other allowances. Despite the 7th Pay Commission having a fitment factor of 2.57, the actual pay hike was only 14.3% on an average, as DA was adjusted to the new basic pay and then zeroed out. The estimated actual pay hike in the 8th Pay Commission could be between 13% to 34%, depending on the fitment factor and adjustment of DA.

Basic Pay: Basic pay will increase based on the fitment factor. For example, a basic pay of Rs 50,000 could become Rs 91,500 at a fitment factor of 1.83 and Rs 1,23,000 at 2.46.

Allowances: DA, HRA and travel allowance will be recalculated based on the new basic pay. DA will be zeroed upon implementation, which could result in actual pay hike being less than the fitment factor.

Pension: Fitment factor will also be applicable for pensioners. For example, the existing pension of Rs 22,450 could become Rs 44,900 at a fitment factor of 2.0.

Impact of 8th Pay Commission on Salary

Minimum Wage: The current minimum basic salary of Rs 18,000 may increase from Rs 21,600 (fitment factor 1.83) to Rs 51,480 (fitment factor 2.86).

Pay Matrix: The 8th Pay Commission will bring a revised pay matrix, with clear salary slabs for different levels (pay matrix levels). For example, a salary of Rs 18,000 at level 1 may rise to Rs 32,940 (1.83) or Rs 44,280 (2.46). At the same time, a salary of Rs 44,900 at level 7 may rise to Rs 82,207 (1.83) or Rs 1,10,554 (2.46).

When will the new salary be implemented?

Higher salaries will increase the purchasing power of employees, which will boost consumer spending and the economy. However, this will also increase government expenditure. The establishment of the 8th Pay Commission has been approved in January 2025, but its terms and conditions have not been released yet. It is expected that it may come into effect from January 1, 2026. However, due to delay, it may slip till 2027.

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