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More than eight months have passed since the formation of the 8th Pay Commission and now the Commission has less than 10 months left to prepare its recommendations. After holding meetings with stakeholders in Bhubaneswar and Kolkata, it is clear that the Commission is not limited to just ‘salary hike’. According to the gazette notification, the scope of the 8th Pay Commission is very wide, which will create a new framework for the future of central employees.

All allowances will be reviewed and simplified

The Commission has been instructed to review the current allowance structure and eligibility rules in depth. Its objective is to simplify and rationalize the existing allowances. Employees may not only see new allowance rates, but there is also a possibility of merger of several allowances and changes in rules to make the claim process transparent.

Emphasis will be on performance-linked incentives

The Commission has been asked to review the existing bonus system and create a new ‘incentive framework’ that directly rewards productivity and excellent performance. This means that in the coming times, salary increases can be based not only on the old method, but on the efficiency, accountability and measurable outcomes of the employee.

Big improvements expected in pension, NPS and gratuity

The Commission will review the ‘Death-cum-Retirement Gratuity’ for employees covered under the National Pension System (NPS) and Unified Pension Scheme (UPS). Also, pension and gratuity benefits of employees who are not covered under NPS will also be analyzed. Removing anomalies in retirement benefits is one of the main focus areas of the Commission, which can provide relief to lakhs of pensioners.

Salary structure will be at par with private sector

A very important provision is that the Commission will now also study the existing pay structure of Central Public Sector Undertakings (CPSUs) and the private sector. The government aims to create a compensation structure that not only attracts qualified talent to government services, but also helps in retaining them in the long run. This step will further strengthen the confidence of government employees.

Relief may come soon from interim report

Although the commission has 18 months to submit its final recommendations, the gazette notification gives it the flexibility to submit an ‘interim report’ if needed. This can provide great relief to the government, as important decisions can be taken on specific issues even before the final report comes. These recommendations will not only be the basis of salaries and allowances for the next decade, but will also give a new direction to the demand of the Indian economy.