8th Pay Commission – Central Govt receives proposal, expected to be unviled in July, 2024
The Central Government has received a comprehensive proposal to establish the Eighth Central Pay Commission (CPC), timed with the upcoming Budget for 2024, expected to be unveiled in July. The proposal aims to review and revise the basic pay, allowances, pensions, and other benefits for central government employees and pensioners.
Urgent Call for the 8th Pay Commission
Shiv Gopal Mishra, Secretary of the National Council (Staff Side) of the Joint Consultative Machinery (JCM) for central government employees, has urged the government to prioritize the formation of the 8th CPC. In a detailed letter to the Cabinet Secretary, Mishra highlighted the need for this commission to address the economic challenges faced by government employees.
Background and Timing to setup 8th Pay Commission
Traditionally, the Central Pay Commission is formed every ten years to evaluate and recommend changes to the pay structure, allowances, and benefits of central government employees, incorporating necessary adjustments for inflation. The 7th Pay Commission, established by then-Prime Minister Manmohan Singh on February 28, 2014, implemented its recommendations starting January 1, 2016.
The 8th CPC is proposed to commence from January 1, 2026. However, the government has yet to announce its formal establishment, leaving over 1 crore central government employees and pensioners awaiting updates, especially following Prime Minister Narendra Modi’s third consecutive term in office.
Inflation and Economic Concerns
Mishra emphasized the post-COVID-19 inflation surge, which has averaged 5.5%, surpassing pre-pandemic levels. “Retail prices of essential commodities and goods required for daily life from 2016 to 2023 have increased by over 80%, while we have only received around 46% Dearness Allowance as of July 1, 2023. This gap highlights the disparity between the actual price rise and the DA provided to employees and pensioners,” Mishra stated.
Need for Periodic Reviews of the Pay Matrix
Mishra advocated for periodic reviews of the pay matrix instead of waiting a decade for revisions. He suggested using the Aykroyd formula, which tracks changes in commodity prices essential to the common man’s basket, to ensure that pay adjustments are more responsive to economic changes.
Dearness Allowance and Pension Issues to be addressed by 8th Pay Commission
Despite the Dearness Allowance (DA) for government employees and pensioners reaching 50% as of January 1, 2024, there has been no decision to restore the Pension under CCS (Pension) Rules, 1972 (updated to 2021) for those recruited after January 1, 2004. Mishra noted that more than 20 lakh civilian central government employees contribute 10% of their basic pay and DA monthly to the National Pension System (NPS), significantly reducing their take-home pay.
Financial Capacity and Revenue Growth of Country
Mishra highlighted the robust financial capacity of the Central Government, noting that revenue collection has more than doubled from 2015 to 2023. The GST collection in April 2023 reached Rs 1.87 lakh crore, and income tax collections for 2022-23 were the highest ever, reflecting a 24.23% growth over the previous year. Indirect tax collections also rose by 7.21% in the same period. This increase in revenue suggests that the government has the capacity to accommodate revised pay structures.
Staff Shortages and Workload to be assessed
Mishra also addressed the issue of staff shortages, noting that the workforce has decreased with approximately 10 lakh vacancies, resulting in increased workload and pressure on existing employees. This further underscores the need for a pay and benefits review to ensure fair compensation and morale.
Mishra stressed the need to establish the 8th Central Pay Commission without delay. He urged the government to engage in discussions and settlements to revise the pay scales, allowances, pensions, and other benefits for central government employees. The establishment of the 8th CPC is crucial for addressing the economic challenges faced by government employees and attracting and retaining qualified and talented candidates in government service.
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