The Central Government has approved the formation of the Eighth Pay Commission for central government employees, which will be implemented in 2026.
The early announcement aims to ensure that the commission’s suggestions and recommendations can be implemented effectively and on time.
Implementation Timeline
The Eighth Pay Commission will come into effect in 2026. This proactive approach allowed sufficient time to implement its recommendations properly.
Currently, government employees receive salaries based on the Seventh Pay Commission, and there is hope that their wages will increase following the Eighth Pay Commission’s rollout.
The government is anticipated to raise pensions and allowances for retired employees. However, the specific date for the formation of this commission has yet to be announced.
Estimated Salary Increases
The fitment factor is crucial in calculating salary increases. It determines the salary and pension increase. In the current Pay Commission, the fitment factor is set at 2.57, which resulted in a minimum wage increase from ₹7,000 to ₹18,000.
A fitment factor of 2.86 is being proposed for the Eighth Pay Commission, which could raise the minimum wage from ₹18,000 to ₹51,480.
Similarly, the minimum pension may rise from ₹9,000 to ₹25,740. Additionally, pensions may increase with promotions and salary hikes.
Understanding the Eighth Pay Commission
The Pay Commission, established by the central government, recommends changes to the salary structure of government employees.
The Seventh Pay Commission was formed in February 2014 and implemented on January 1, 2016, with salaries increased from ₹7,000 to ₹18,000. Typically, a new commission is constituted approximately every ten years.
Salary Calculation Process
Fitment Factor: The fitment factor is used to adjust the employee’s current basic salary per the Seventh Pay Commission to determine the new basic salary under the Eighth Pay Commission. For instance, a proposed fitment factor of 2.28 means that an employee’s salary will be multiplied by this factor for the new calculation.
Calculation: The current salary is multiplied by the fitment factor to calculate the new salary.
- Example 1: Level 1 Employee
- Current Salary (7th Pay Commission): ₹18,000
- Fitment Factor: 2.28
- New Salary = ₹18,000 x 2.28 = ₹40,944
- Example 2: Level 2 Employee
- Current Salary (7th Pay Commission): ₹19,900
- Fitment Factor: 2.28
- New Salary = ₹19,900 x 2.28 = ₹45,372
Including Dearness Allowance (DA): The Dearness Allowance is an additional payment provided to employees to offset inflation and will also be included in the new salary structure under the Eighth Pay Commission. DA is expected to reach 70% by 2026:
- Example: Including DA
- New Basic Salary for Level 1 employee: ₹40,944
- Expected DA (70%): 70% of ₹40,944 = ₹28,660.80
- Total Salary (Basic + DA) = ₹40,944 + ₹28,660.80 = ₹69,604.80
Using the Pay Matrix: The pay matrix displays salaries for each level under the Eighth Pay Commission, calculated based on the fitment factor.
For example, the salary for a Level 1 employee is projected to range from ₹18,000 to ₹21,600. Meanwhile, salaries for higher levels, such as Level 14, might vary from ₹1,23,100 to ₹1,47,720.
By following this process, government employees are expected to see a significant salary increase starting January 1, 2026, with the minimum wage anticipated to rise from ₹18,000 to ₹41,000.