8th Pay Commission: The introduction of the 8th Central Pay Commission (CPC) on January 1, 2026, will lead to the revision of salaries, pensions, and allowances for over one crore central government employees and pensioners, providing them with notable benefits. The announcement of the 8th Pay Commission has sparked interest in how much will be salary hike for approximately 1.2 crore central government employees and pensioners.
The 8th Pay Commission is anticipated to follow in the footsteps of the 7th Pay Commission by utilising the Aykroyd formula in determining salary and pension increases for central government employees, taking into account the prevailing economic conditions.
Aykroyd Formula and salaries
The Aykroyd formula, created by Dr. Wallace Aykroyd, a nutritionist, was designed to determine the minimum cost of living. This formula recommended that wages should be calculated based on the nutritional needs of an average worker. Dr. Aykroyd focused on the basic necessities of a worker, such as food, clothing, and shelter, when developing this formula to establish an appropriate wage. The 15th Indian Labour Conference (ILC) adopted this formula in 1957 to establish minimum wages for a worker, their spouse, and two children (equivalent to three consumption units).
7th Pay Commission and Aykroyd Formula
The minimum basic pay for central government employees was increased from Rs 7,000 to Rs 18,000 by the 7th Pay Commission, utilising the Aykroyd formula, the Financial Express reported. This salary adjustment was determined by taking into account the cost of living and nutritional requirements at the time.
Approximately a decade ago, the 7th pay panel applied a fitment factor of 2.57 to update the salary and pension of central government employees and pensioners. The pay matrix, which is based on this fitment factor and Aykroyd formula, has been in effect since the implementation of the 7th Pay Commission's recommendations in 2016.
The pay matrix framework established pay levels and annual progressions while utilizing the Aykroyd formula for calculating the minimum pay. This methodology includes factoring in inflation to ensure equitable and necessity-driven wages.
8th Pay Commission and Aykroyd Formula
The upcoming 8th Pay Commission is expected to adopt a similar methodology by combining the Aykroyd formula with updated market data to ensure that government salaries remain in line with current living costs.
Reports suggest that the government may consider a fitment factor between 1.92 to 2.86. If the higher end of the range, 2.86, is selected, the minimum basic salary for government employees could potentially increase to Rs 51,480, a significant jump from the current Rs 18,000. Additionally, pensions could see an increase to Rs 25,740, up from Rs 9,000.
Fitment factor
The calculation of salary and pension increases is determined by multiplying the fitment factor with the current minimum salary or pension amount. The specific percentage of the salary increase under the 8th Pay Commission is not yet known. While it is premature to predict the exact salary increase for central government employees at this point, previous commission recommendations can provide a general idea of the overall impact.
It is expected that the composition of the 8th Pay Commission, including a chairman and two members, will be announced by the Centre soon. Once established, discussions with stakeholders will begin to propose revised salaries and pensions for central government employees to the government.