As we approach the establishment of the 8th Central Pay Commission (CPC), many people think that the 7th pay commission already gave a solid wage boost, so we shouldn’t expect a massive pay jump from the new panel.

 

However, central government employees might be surprised to learn that the 7th CPC didn’t actually deliver the biggest real pay increase.

 

When we talk about real pay increases, we’re considering inflation, which is different from just looking at the nominal pay raise. For central government workers, real pay is safeguarded by the dearness allowance (DA), which is calculated based on how much the AICPI(IW) rises above a set base value.

 

Looking back at the history of pay hikes from various commissions since independence, it’s clear that the 6th pay commission provided the largest real pay increase.

 

With the exception of the 2nd pay commission, all the commissions before the 7th CPC offered over a 20% boost in real pay. The 6th CPC gave a whopping 54% real increase, while the 7th pay commission only managed a 14.3% real hike.

 

To determine an employee’s salary in the new pay structure as of January 1, 2016, you would take their basic pay (which includes pay in the pay band plus grade pay) and multiply it by 2.57. Out of this multiplier, 2.25 accounts for the merging of basic pay with the Dearness Allowance (DA), which was estimated at 125 percent on that date. The remaining amount represents the actual increase recommended by the Commission, which calculates to a real increase of 14.2 percent (2.57 divided by 2.25 equals 1.1429), according to the 7th pay commission’s report.

 

In comparison, the 3rd, 4th, and 5th pay commissions provided real pay increases of 20.6%, 27.6%, and 31% respectively for central government employees.

 

What can we expect from the 8th CPC?

As we approach the establishment of the 8th CPC, central government employees and pensioners are looking forward to a pay raise that guarantees a “decent and dignified living wage.” However, based on past real pay increases, employees might have reason to anticipate more than just a modest wage bump.

 

The new pay panel is expected to be officially formed in April 2025.

 

Before the 8th CPC is set up, the staff-side of the National Council of Joint Consultative Machinery (NC-JCM) has recommended that the new pay panel’s terms of reference should include a review of the “current pay structure, allowances, and other benefits, as well as retirement benefits like pensions, gratuities, and other terminal benefits.”