look news india
New Delhi: A big and shocking discussion has started regarding the 8th Pay Commission for about 1.2 crore central government employees and pensioners. Although there is still time for the commission’s report to be ready, employee organizations have raised a demand which, if accepted, could see the biggest jump in the salaries of government employees so far. The whole game revolves around the ‘Family Unit Formula’, which can completely change the foundation of the current pay structure.
What is ‘Family Unit’ formula and why is it creating ruckus?
Actually, a ‘family unit’ is considered the basis for determining the minimum salary of central employees. Currently, under the 7th Pay Commission, a unit consists of 3 members (employee, spouse and a child). But employee organizations argue that this calculation is completely impractical in today’s times.
Organizations demand that a family unit should have at least 5 members (employee, spouse, two children and elderly parents). Considering the rising cost of living in urban areas and the huge expenditure on education and health, the base of 3 members has now become outdated.
If there is 3 to 5 units then the entire salary mathematics will change.
If the government accepts this demand, it will not only change the number of members, but it will directly impact your bank account. From a mathematical point of view, going from 3 to 5 members means a direct increase of 66% in the needs of the family.
At present the expenditure of each family unit is considered to be around 33% of the total salary. In such a situation, the following equation may have an impact on the calculation of salary:
$$\text{New Salary} = \text{Existing Base} \times \left( 1 + \frac{66}{100} \right)$$
‘Great tsunami’ in fitment factor and minimum wage
In the 7th Pay Commission, the fitment factor was kept at $2.57. In the initial discussions for the 8th Pay Commission, it was being considered at $1.76$. But if the ‘5 family units’ formula is applied, the fitment factor may go beyond $3.0$.
Minimum Wage: At present the minimum basic salary is ₹18,000. After 5 unit formula, it can increase to more than ₹ 54,000.
Impact on salary slab: If the basic salary of an employee is currently ₹78,800, it can reach ₹2,43,492 with the new formula and gross fitment factor of $3.09.
Will have to wait till 2027
However, all this is still at the level of proposals and demands. Experts believe that the 8th Pay Commission may submit its report by mid-2027, only after which the government will take the final decision on its implementation. The biggest challenge for the government will be fiscal deficit, because such a huge salary increase will put a huge burden on the treasury. Still, 1.2 crore people are hopeful that this time they will get results as per their responsibility.