Which will benefit employees more: a higher fitment factor under the 8th Pay Commission or a 7% annual increment? Understand the full 10-year calculations for salaries at Levels 5, 6, and 7.
8th Pay Commission: Which formula is more beneficial?
Central government employees' expectations regarding the 8th Pay Commission are steadily rising. Some are demanding a higher fitment factor, while others want an increase in the rate of annual increments. Now the question is, which formula is best for employees? Is a one-time increase in basic salary appropriate, or will higher increments each year be more beneficial in the long run?
To answer this question, if we calculate the future for 5 years and 10 years, the entire picture could change. Let's understand the details from here.
What is the difference between a fitment factor and an increment?
The fitment factor is the multiplier used to convert an old salary into the new pay commission. For example, multiplying the current basic salary by a fixed number to arrive at a new basic salary. Meanwhile, an increment is the annual increase an employee receives. In the Seventh Pay Commission, the fitment factor is 2.57, and the annual increment is 3 percent.
Employee organizations are demanding more than this for the Eighth Pay Commission. Many organizations have demanded a fitment factor of 3.833. They have also proposed an annual increment of 6 to 7 percent.
What's the math behind these three formulas?
We use three formulas to compare salaries:
- First formula: 2.57 fitment factor and 3% annual increment
- Second formula – 2.1 fitment factor and 7% annual increment
- Third formula – 2.57 fitment factor and 7% annual increment
What will be the salary of Level 5 employees?
In the Seventh Pay Commission, the basic salary of Level 5 employees is Rs 29,200.
| Formula | First year | 5 years later | After 10 years |
| 2.57 factor + 3% increment | 75,044 rupees | 84,463 rupees | ₹97,915 |
| 2.1 factor + 7% increment | 61,320 rupees | 80,378 rupees | Rs 1,12,734 |
| 2.57 factor + 7% increment | 75,044 rupees | 98,367 rupees | Rs 1,37,965 |
What will be the salary of level 6 employees?
The current basic salary of level 6 employees is Rs 35,400.
| Level 6 Formula | First year | 5 years later | After 10 years |
| 2.57 factor + 3% increment | Rs 90,978 | Rs 1,02,397 | Rs 1,18,706 |
| 2.1 factor + 7% increment | 74,340 rupees | ₹97,445 | Rs 1,36,671 |
| 2.57 factor + 7% increment | Rs 90,978 | Rs 1,19,254 | Rs 1,67,259 |
What will be the salary of level 7 employees?
The current basic salary of level 6 employees is Rs 44,900.
| Level 6 Formula | First year | 5 years later | After 10 years |
| 2.57 factor + 3% increment | Rs 1,15,393 | Rs 1,29,876 | Rs 1,50,562 |
| 2.1 factor + 7% increment | ₹94,290 | Rs 1,23,595 | Rs 1,73,348 |
| 2.57 factor + 7% increment | Rs 1,15,393 | Rs 1,51,257 | Rs 2,12,145 |
What's best for employees?
The benefits of a higher fitment factor are obvious, especially at the initial stage. This increases the new basic salary substantially. However, in the long run, even a higher annual increment becomes a special gift.
In this calculation, a 7% increment with a 2.57 fitment factor yields the highest basic salary at all three levels. Furthermore, a 7% increment with a 2.1 fitment factor also surpasses the 2.57 factor and 3% increment after 10 years.
