The formation of the 8th Pay Commission is fast approaching. Some central government employees await this significant body with hope and trepidation, as it will decide their salaries and allowances. While a salary increase is expected, some employees wonder whether the scrapping or restructuring of allowances will happen. Will this be a case of history repeating itself?
An analysis of the last commission, the 7th Pay Commission
The 7th Pay Commission (7th CPC) was different from its predecessors in every way, including a fitment factor of 2.57, which increased the minimum salary to ₹18,000 and the maximum to ₹2,25,000. Then came the drawbacks: Of the 196 allowances reviewed, 101 were either wholly abolished or merged with some others, leaving only 95 intact. Thus, this impacted across the board sectors, and important allowances were either done away with or restructured.
Key allowances abolished during the 7th Pay Commission
- Accident Allowance: Excluded from the report.
- Acting Allowance: Abolished and merged into Additional Post Allowance.
- Air Dispatch Pay: Removed altogether.
- Coal Pilot Allowance: No longer applicable.
- Family Planning Allowance: Out of existence.
- Overtime Allowance (OTA): Excluded from the list of allowances permissible to serve.
- Cycle Allowance: Off the list.
- Clothing Allowance: Merged into Dress Allowance.
- Special Scientist Pay: Nixed.
- Sandurban Allowance: Merged with Tough Location Allowance-III.
Such changes left many employees feeling that the alterations were somehow unfair, and again similar concerns are being raised with the emergence of the 8th Pay Commission.
What Do We Expect from the 8th Pay Commission?
The 8th Pay Commission is expected to finalize its terms of reference by April 2025, and the government will appoint its members and chairman shortly thereafter. The commission will likely spend about a year consulting stakeholders, including representatives of central government employees, before finally submitting its report.
Key Expectations and Predictions
- Salary Hike with a Higher Fitment Factor: The assumed fitment factor may go up to 3.00x, and with ₹26,000 becoming the minimum salary, employees will find some relief amidst ever increasing inflation.
- Review of Allowances: New Allowances: Fresh allowances towards disturbing employee needs could be introduced by the commission. Old Allowances to go: Like the 7th CPC, quite a few stagnant allowances are likely to be done away with or merged.
- Increase in Dearness Allowance (DA): Increase in the DA rate would further supplement the existing support for employees.
- Pension Reforms: There may also be positive changes for pensioners in terms of improved pension payouts and amended regulations.
Will They Cut Allowances Again?
While the 7th Pay Commission’s abolition of 101 allowances was received with mixed feelings, allowance cuts under the 8th Pay Commission are still uncertain. This time around, though, it is more likely to “harmonize” allowances under the exigencies of present-day economy and employee requirements. However, it cannot be ruled out that there will be some allowances that will continue to be cut down or merged.
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