8th Pay Commission: New Family Unit Formula May Impact Millions of Employees and Pensioners

New Delhi: Discussion has intensified between central government employees and pensioners regarding the 8th Pay Commission. This time the issue that is getting maximum attention is the “Family Unit Formula”. Employee organizations say that the current salary structure is not adequate as per today's family expenses and lifestyle, hence a change in the definition of family and the way salary is determined based on it is necessary. It is believed that if this formula is amended, it may affect not only the basic salary but also the allowances, pension and total salary structure.

What is the Family Unit Formula?

“Family Unit” is used in government pay commissions to assess the minimum requirements of employees. Till now, expenses have generally been decided on the basis of one employee, his wife and two children. Employee organizations say that this model is now outdated and does not reflect the needs of the present times.

Why is there a demand for change?

Employee unions argue that inflation, education, health and housing expenses have increased much compared to before. Many organizations have suggested that parents should also be included in the definition of family and the total unit should be increased from three to five. He says that this will make salary determination more realistic and in line with the current circumstances.

Can the minimum salary increase?

Some employee organizations have placed a demand before the 8th Pay Commission to increase the minimum basic salary from Rs 18 thousand to Rs 69 thousand. Along with this, it has also been proposed to implement 3.83 fitment factor. No final decision has been taken by the government on this yet.

What will be the effect of fitment factor?

Fitment factor is the same coefficient on the basis of which the old basic salary is converted into the new salary. If it increases, there will be a direct impact on the basic pay, DA, HRA and pension of the employees. Many employee organizations are demanding it be much higher than the current level.

Will pensioners also benefit?

If the new formula is implemented, its benefits will not be limited to employees only. The pension of pensioners and their related benefits can also be decided on the basis of the new salary structure. Therefore, pensioners organizations are also seen active on this issue.

Has the government taken any decision?

At present the 8th Pay Commission is in the suggestion and consultation stage. Different employee organizations are presenting their demands before the commission. No proposal has been approved by the government yet. Therefore, the ongoing discussions regarding salary increase and new formula are being seen only as possibilities at the moment.