8th Pay Commission: 15-20% increase in total govt salaries and pension across India expected

The 8th Central Pay Commission (CPC) will not only help increase the salaries and pensions of Central Government employees and pensioners, but it is also expected to push the monthly wages of employees and pensioners of state governments and CPSEs.

But why?

The report expects the 8th CPC pay hike will eventually benefit over 1.8 crore employees and 1.3 crore pensioners, while the total wage bill will likely jump by US$55 billion.

"As state governments and Central Public Sector Enterprises (CPSEs) typically follow the CPC's recommendations, the pay hike is likely to benefit 18m general government employees and 13m pensioners," UBS said.

"In our base case, we assume a 15-20% increase in total wages, leading to a likely increase in the comprehensive wage bill (central government + states + pensions + CPSEs) of about US$55bn (110bp of FY27 GDP)," the report added.

Interestingly, the report expects the pay revisions in the public sector will also indirectly influence wages in the private sector.

How much pay hike is expected?

Currently, a lot of speculations around the expected pay hikes in the 8th CPC are doing the rounds on social media.

However, Central Government employees and pensioners can expect a decent hike in their wages from the current level as was seen during the 7th CPC when the government increased salaries by a minimum fitment factor of 2.57 for all employees.