8th Pay Commission may hike govt employees' salary by up to 34%: Know fitment factor, timeline

8th pay commission

Government employees' salary are likely to be increased by 30-34 per cent following the implementation of the 8th pay commission, according to a report by a brokerage firm Ambit Capital. The same hike is expected in the pension of retired government employees.

The 8th pay commission, set to replace the 7th pay commission implemented in 2016, will directly benefit around 4.4 million central government employees and 6.8 million pensioners. A pay commission is established every ten years to revise the salaries of the central government employees.

"The 7th Pay Commission (January 2016 - December 2025) had implemented a modest salary hike of ~14% (lowest since 1970). We expect the 8th Pay Commission to announce a hike of 30-34% for salaries & pensions to cover ~11mn beneficiaries to boost consumption," the report states.

The 8th pay commission's recommendations are scheduled to be implemented in January 2026 however, are subjected to government's approval.

Meanwhile, no details regarding the constitution of the commission, members etc have been declared yet.

The report further states that the commission can recommend a fitment factor anywhere from 1.83 and 2.46. It is an important factor as the current basic salary is directly multiplied by it to find the pay hike for the employees.

Earlier, the fitment factor was 2.57 in the 7th Pay Commission, which increased the minimum basic pay to Rs 18,000 per month from Rs 7,000. However, the Dearness Allowance (DA) became zero and the actual increase in the salary component was 14.3%.

The basic components of salary includes basic pay, dearness allowance (DA), house rent allowance (HRA), transport allowance (TA), and other allowances which decide the actual net salary.

Additionally, the report stated that implementation of the recommendation can be delayed beyond the proposed deadline of January 2025 as the commission hasn't been former yet and this could result in higher arrears payments.