8th Pay Commission: 5 factors that will decide salary hikes for central govt employees

The commission, to be headed by former Supreme Court Justice Rajana Desai, will make recommendations for revising salary and various allowances provided to central government employees. It will also recommend necessary revisions in pensions for retired employees.

While announcing the decision to approve the Terms of Reference for the 8th Pay Commission, the Union Cabinet today outlined five points or factors that the 8th CPC will keep in view while making its recommendations.

• First, the economic conditions in the country and the need for fiscal prudence.

• Second, the need to ensure that adequate resources are available for developmental expenditure and welfare measures;

• Third, the unfunded cost of non-contributory pension schemes;

• Fourth, the likely impact of the recommendations on the finances of the State Governments, which usually adopt the recommendations with some modifications; and

• Fifth, the prevailing emolument structure, benefits and working conditions available to employees of Central Public Sector Undertakings and the private sector.

The government periodically constitutes the Central Pay Commissions to go into various issues of emoluments structure, retirement benefits and other service conditions of Central Government employees. The Pay Commission makes recommendations on the changes required thereon.

It is expected that the recommendations of the 8th Pay Commission will be implemented with effect from January 1, 2026.

Earlier, the Government had announced the decision to form the 8th Pay Commission in January 2025. While announcing the decision in January, the Government had said that the 8th CPC will examine and recommend changes in the salaries and other benefits of Central Government employees.