An important development has occurred for central government employees and pensioners related to the 8th Pay Commission. Employee unions have demanded a change in the basis for calculating minimum wages. They have asked the government to increase the "family unit" from 3 to 5 members in the calculation. If this proposal is accepted, the minimum wage, fitment factor, and pension could see a significant increase.

What is the family formula?

Under the 7th Pay Commission, the minimum wage was calculated based on three consumption units. This included the employee, spouse, and two children as partial units. Keeping this in mind, the minimum basic pay was set at ₹18,000. Employee unions argue that due to changes in the current socio-economic landscape, elderly parents are also dependents. This means that the number of units needs to be increased from three to five.

Calculation

If the number of units changes from 3 to 5, this calculation represents a 66% increase in the ratio. This means that if the current basic pay is ₹18,000, it will increase to ₹54,000 with the increase in family units.

Effect of fitment factor

The fitment factor acts as a multiplier to convert the current pay into the new pay scale. It's currently 2.57, but employee unions are demanding it be raised to between 3.0 and 3.25. Furthermore, since pensions are typically 50% of the last basic pay, any increase in the minimum wage will automatically increase it.

Other demands

The unions are demanding the reinstatement of the old pension scheme and an increase in annual salary increases from 3% to 7%. Demands for reforms in the promotion policy are also gaining momentum, with unions seeking five career promotions.

If the demands are approved and implemented by January 1, 2026, this could lead to a historic increase in salaries and pensions. However, final figures and numbers are still unclear.

PC: News24online