It is expected that under the 8th Pay Commission, like the 7th Pay Commission, the Acroyd formula will be used for salary and pension hike for central government employees keeping in mind the current economic conditions.
8th Pay Commission: The government has recently proposed the 8th Pay Commission for central employees, under which the pension and allowances of more than 1 crore government employees and pensioners will increase. After the announcement of the 8th Pay Commission, people want to know how much the monthly income of central employees and pensioners will increase? Now a formula has come out regarding this, from which it can be estimated how much the salary of employees from level 1 to 10 can increase.
It is estimated that under the 8th Pay Commission, like the 7th Pay Commission, the Akroyd formula will be used for salary and pension hike for central government employees keeping in mind the current economy conditions.
What is Akroyd Formula?
This formula was created by Dr. Wallace Akroyd, which was designed to determine the minimum cost of life. In this formula, it was suggested that wages should be calculated based on the nutritional needs of the average employee. Dr. Akroyd focused on the basic needs of employees like food, clothing and housing while developing this formula for fair wages. The 15th Indian Labor Conference (ILC) adopted this formula in 1957 to establish the minimum wage for an employee, their spouse and two children.
7th Pay Commission and Akroyd Formula
According to a report by Financial Express, the 7th Pay Commission had increased the minimum basic salary for central government employees from Rs 7,000 to Rs 18,000 using the Akroyd formula.
Almost a decade ago, the 7th Pay Commission applied a fitment factor of 2.57 to update the salaries and pensions of central government employees and pensioners. The pay matrix based on this fitment factor and Akroyd formula has been effective since the implementation of the 7th Pay Commission recommendations in 2016.
How much will the salary increase under the 8th Pay Commission on this formula?
It is believed that the Akroyd formula will be adopted under the 8th Pay Commission as well, to ensure that the salary of government employees is appropriate according to today’s inflation? Reports suggest that the government may consider a fitment factor between 1.92 and 2.86. If the higher end of the range, 2.86, is chosen, the minimum basic pay for government employees could potentially rise to Rs 51,480, much higher than the current Rs 18,000. In addition, pensions could rise by Rs 9,000 to Rs 25,740.
Fitment factor
The calculation of salary and pension hike is done by multiplying the fitment factor with the current minimum wage or pension amount. What will be the percentage of salary hike under the 8th Pay Commission? It is not clear yet. It is expected that the central government will soon announce the structure of the 8th Pay Commission, which will include a chairman and two members.
