8th Pay Commission salary hike may miss January 2026 deadline: Will it impact fitment factor calculation?
Why the 8th Pay Commission might be delayed beyond January 2026?
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Fitment factor
Dearness Allowance (DA) to be merged with basic pay
Pensioners may see revised benefits
What government employees should prepare for
For nearly 35 lakh central government employees and over 67 lakh pensioners, the 8th Pay Commission has become a source of speculation. With growing chatter around possible pay hikes and revised pension benefits, expectations are soaring. Despite the excitement, there's still no official word from the government on when the 8th Pay Commission will be constituted, leaving many in limbo.Many employee unions have begun voicing concern over the delay, urging the government to form the Commission well in advance to ensure timely implementation and reduce uncertainty for both employees and pensioners.The 7th Pay Commission, which came into effect in January 2016, was announced nearly two years prior, in February 2014. That timeline gave enough room for report submission, cabinet approval, and a timely rollout. However, as of mid-2025, the 8th Pay Commission is yet to be formed, and the crucial Terms of Reference (ToR), which define the scope and goals of the commission, haven't been finalised either.Senior officials have confirmed that internal discussions are underway, but given the pace of bureaucratic processes, the rollout may stretch well beyond the expected January 1, 2026 timeline. Even if the Commission is announced by the end of this year, historical patterns indicate a gap of 18-24 months before the recommendations are ready for implementation. At this pace, the hike might only materialise by late 2026 or early 2027.Adding to the delay are fiscal constraints, with the government balancing welfare spending, election promises, and fiscal deficit targets. A generous hike could significantly strain the exchequer, prompting policymakers to tread carefully.A major part of the salary revision hinges on the fitment factor, Fitment factor is the number used to recalculate an employee's basic salary. In the 7th Pay Commission, this was set at 2.57, raising the minimum pay from Rs 7,000 to Rs 18,000. Going by the views expressed by various experts 8th Pay Commission could recommend a fitment factor between 2.5 and 2.86. "Considering the inflation factor, there are indications that the fitment factor may stay between 2.5- 2.8 times, which will give a significant boost to employee salaries between Rs 40,000 and Rs 45,000," says Krishnendu Chatterjee, Vice President at TeamLease.If the top-end 2.86 figure is accepted, the minimum basic salary could climb to over Rs 51,000. However, due to its fiscal implications, such a steep hike may be challenging. A 2.6x to 2.7x hike appears to be more likely, providing a significant increase while keeping the government's finances in check.The fitment factor for the 7th Pay Commission was 2.57 and the minimum basic salary was hiked to Rs 18,000 from Rs 7,000. For the 6th Pay Commission, the fitment factor was 1.86 and the minimum basic salary was raised from Rs 2,750 to Rs 7,000.Another likely shift is the merger of the Dearness Allowance with the basic salary. Currently pegged at around 55% effective from January 2025, DA helps offset the impact of inflation and is revised twice in a year. Before the effective date of 8th Pay Commission early next year, there is one more DA hike is due to be announced in coming months which will be effective from July 2025. When a new Pay Commission is implemented, DA accumulated up to that point is typically merged into the revised basic pay.While this increases the overall salary package, it also means future DA hikes start from zero. Employees will see a rise in gross salary and related allowances, such as HRA and transport, but may also experience low DA in the near term. However, a higher base salary will mean that each DA hike will mean a higher increase in salary.The implementation of the 8th Pay Commission is not only being eagerly awaited by salaried employees. Nearly 67 lakh government pensioners are also impacted by any revision in the pay scale. Previous Pay Commissions have included changes in pension calculation formulas and benefits, and similar adjustments are expected this time as well.The merger of Dearness Relief (DR) into basic pension also affects pensioners, as their payouts are tied to similar structures. Any revision in the base figures could significantly alter monthly pension amounts.Retired employees' associations have echoed the concerns of serving staff, pushing for greater clarity from the government on how pension recalculations will be carried out in the new structure.Despite the uncertainty, a few things seem inevitable. A revised pay structure is coming, but it may take longer than expected. The eventual hike could push minimum salaries up to Rs 40,000 - Rs 45,000, with pension adjustments following suit. DA will reset, but higher allowances may offset the initial flattening in salary growth.Central government staff would do well to temper expectations, at least in terms of timing. The gains could be significant, but the road to them may be more drawn out than previous commissions.The 8th Pay Commission is aimed to deliver significant financial changes for government employees and pensioners. Yet, the pace of bureaucracy, pending approvals, and fiscal balancing may delay the implementation beyond the earlier-set target of January 2026.
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