The 8th Pay Commission has once again become a topic of discussion for central government employees and pensioners. As discussions related to commission are progressing, expectations of increase in salary and pension are also increasing. This time, the main focus is on the fitment factor, as this is the factor that will determine the limit on salary and pension increases. The recent suggestion of 3.25 fitment factor has given new hope to the employees. Here, we explain in simple words what the fitment factor is and what the figure of 3.25 means to you.
What is fitment factor and why is it so important?
In simple words, fitment factor is a number used to increase the existing basic salary and pension. When the Pay Commission gives its decision, this fitment factor is applied to all levels, and the new basic salary is decided. After this, Dearness Allowance (DA) and other increments are calculated on the basis of this new basic salary. Therefore, even a small change in the fitment factor can have a big impact on your finances.
3.25 Where did the suggestion of fitment factor come from?
A new twist in this whole matter came when the Federation of National Postal Organizations suggested a fitment factor ranging from 3.0 to 3.25. This suggestion was made for postal employees including Group A to Group D employees. The organization says the problem of salary stagnation is a long-standing one, and a higher fitment factor is necessary to maintain balance at all levels.
Understanding Fitment Factor Calculation with an Example
At present, the minimum basic salary of a Level 1 central government employee is Rs 18,000.
If fitment factor is fixed at 2, the basic salary will increase to Rs 36,000.
If this factor becomes 3, then the basic salary can reach Rs 54,000.
In the 7th Pay Commission, the fitment factor was fixed at 2.57, increasing the minimum salary from Rs 7,000 to Rs 18,000. This is why employees are demanding higher fitment factor this time too. How much will the salary increase in the 8th Pay Commission? What are the estimates? In the last few months, many speculations have come to light regarding the fitment factor. According to Ambit Capital, the total salary increase could be between 30 to 34 percent, putting the fitment factor in the range of 1.8 to 2.46.
Meanwhile, employee organizations are focusing on the 2.57 fitment factor of the 7th Pay Commission. Considering the rising inflation and daily expenses, employees expect this factor to be at least around the same level or slightly higher this time.
Recently, former Finance Secretary S.C. Garg also gave a statement. He believes a fitment factor between 1.92 and 2.08 would be more practical. He clearly said that a figure of 2.86 or more can put a lot of pressure on the financial position of the government. According to him, the final decision will depend on the economic condition of the government and the report of the Pay Commission.
Demand for 5 percent annual increase
The postal employees’ organization has demanded not only higher fitment factor but also a 5 percent annual salary increase. He has also demanded improvement in allowances and change in the pay matrix system. According to the General Secretary of the organization, a meeting of the National Council may be held at the end of February, after which all the suggestions will be collected and sent to the Chairman of the 8th Pay Commission.
What fitment factor is actually possible?
At present, there is a wide gap between the demands of employees and the opinions of experts. While employers want a fitment factor of 3 or higher, most experts believe the final decision will probably be between 2.0 and 2.5. The government has to manage the budget and expenses along with meeting the expectations of the employees.
Increase in salary and pension based on fitment factor
The biggest question right now regarding the 8th Pay Commission is what will be the fitment factor. This single figure will decide how much the salary and pension will increase. Speculation will continue until the final report of the commission is released. However, one thing is certain: the government’s upcoming decision on the fitment factor could change the lives of millions of central government employees and pensioners.