8th Pay Commission news: Union Minister Piyush Goyal announced earlier this year that the Cabinet has approved the constitution of the 8th Pay Commission to revise the salaries of central government employees.
Notably, the fitment factor will be one of the most keenly watched factors in the 8th Pay Commission. Here’s a detailed guide on the importance of fitment factor and how it will impact salary hike —
8th Pay Commission: Why is fitment factor important?
Fitment factor is used to revise salaries, pensions, and allowances of government employees. It is an essential multiplier that sets the levels for salaries and pensions for government employees. Fitment factor is determined by considering various factors such as inflation, employee needs, and the government’s financial capacity.
8th Pay Commission: Why is fitment factor important for salary hike?
The salary structure for central employees is currently based on the 7th Pay Commission’s fitment factor, introduced in 2016. The Commission used a fitment factor of 2.57 per cent. However, this doesn’t mean salaries increased 2.57 times; instead, this factor was added to the basic pay, increasing it to at least ₹18,000.
Meanwhile, the dearness allowance is reset to zero at the start of each new Commission because the base index is recalculated. Hence, the real salary increase under the 7th Pay Commission was 14.3 per cent, as Mint reported earlier.
8th Pay Commission: What does a government employee’s salary consist of?
A government employee’s salary includes basic pay, dearness allowance (DA), house rent allowance (HRA), and transport allowance. The basic salary makes up 51.5 per cent of the total income, while DA accounts for about 30.9 per cent, HRA for roughly 15.4 per cent, and transportation allowance for approximately 2.2 per cent.
What may be the fitment factor in the 8th Pay Commission?
According to a report by Kotak Institutional Equities, the fitment factor under the 8th Pay Commission is expected to be around 1.8, resulting in a salary hike of around 13 per cent.