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A very good news has emerged for more than 1 crore central employees and pensioners of the country. The stir regarding the long awaited 8th Pay Commission has intensified. A new formula has come out from the employee unions to increase the salary, which can bring a bumper jump in the take-home salary of the employees by changing not only the basic salary but also the entire structure of allowances.

Basic salary may increase by 65%

According to a report by ET, under the 8th Pay Commission, there is a possibility of a huge increase of up to 65 percent in the basic salary of the employees. If this proposal is implemented, there may be a historic jump in the salaries of Level-1 (entry-level) employees. Employees’ organizations are demanding to make the fitment factor of 2.10 the basis, due to which there is bound to be a big increase in the minimum basic pay.

Why is the salary formula changing?

Employee organizations argue that the structure of the 7th Pay Commission is now falling short in the face of rising inflation and the cost of living in big cities. The unions have demanded that while determining the salary, the family should not be considered as a unit of only 3 members, but it should be increased to 4.4 units by including dependent parents. This will not only increase the basic pay, but will also strengthen the base of other allowances.

‘Take-home’ salary will increase due to HRA, TA and DA merger

Several important changes are proposed in this mathematics of salary increase:

• Increase in HRA: The employee unions have demanded 36%, 24% and 12% house rent allowance for X, Y and Z category cities respectively.
• Transport Allowance (TPTA): In view of the increasing expenses in metro cities, a minimum transport allowance of Rs 9,000 has been recommended for Level-1 employees.
• Merger of DA into Basic: Many organizations have demanded that when Dearness Allowance (DA) reaches 25%, it should be included in the basic salary. This will ease future pay revision and pension calculations.

What does the new salary calculation say?

At present, the gross salary of a Level-1 employee in an X-category city is approximately Rs 37,080. If fitment factor of 2.10, 36% HRA and revised transport allowance is applied, then this salary can increase to approximately Rs 61,344 per month. This is a huge increase of 65 percent overall.

When can I get the gift?

It is important to remember that these are still recommendations of employee organizations and the government has not given them final approval. However, pressure on the government is increasing from major organizations like AINPSEF, NC-JCM and AIDEF. If the government takes a decision on this soon, not only will the purchasing power of the employees increase, but it will also give a new impetus to growth by increasing spending in the economy. A big official announcement regarding this is expected in the coming few months.