8th Pay Commission: Grade pay to pay matrix - How central govt's salary structure evolved before 8th CPC

The 8th Pay Commission announced by the Government recently will examine the current pay structure of the central government employees. Like the last two pay commissions, it is anticipated that the new pay panel may also suggest a revamped pay structure.

Central Government Employees' pay structure has undergone many changes in the past. Before the 8th CPC announcement, the 7th pay commission had recommended a well thought-out pay structure that replaced grade pay with levels in a new pay matrix. Earlier, the 6th pay commission recommended running pay bands with grade pay as status determiner while pay scales existed earlier.

While the formation of the 8th pay commission is still underway, this article looks at how the salary structure of central government employees changed in the 7th pay commission:

Grade pay replaced by pay matrix

The 7th pay commission replaced the grade pay of the 6th pay commission with a rationalised pay matrix, which can help you understand all pay levels in one simple chart.

In its report, the 7th CPC noted that levels in the pay matrix display a logical pay progression. With the help of the pay matrix, employees can see their pay level, where they fit in and how they are likely to progress over their career span.

Understanding the pay matrix

In the new pay matrix, levels were assigned to various grade pays recommended by the 6th pay commission. There are two dimensions of the pay matrix.

• First, it has a “horizontal range” in which each level corresponds to a “functional role in the hierarchy”. A number has been assigned to each level, from 1, 2, and 3 and so on till 18.

• Second, it has the “vertical range” for each level, which denotes ‘pay progression’ within that level. These indicate the steps of annual financial progression of three percent within each level.

The starting point of the pay matrix is the minimum pay based on the Aykroyd formula.

Issues addressed through pay matrix by 7th CPC

The pay matrix addressed the important issue of adequacy of the compensation structure. “The Commission observes that the purpose of pay is to compensate the employees for work done, to motivate them to perform well. The purposes also include attracting talent to government service and also retaining them, thus avoiding the need for expensive recruitment and training for replacement. The new pay structure has been devised in the form of a pay matrix to provide complete transparency regarding pay progression,” the 7th CPC noted in its report.

Further, the 7th CPC said that the new pay matrix was “designed keeping in view the vast opportunities that have opened up outside government over the last three decades, generating greater competition for human resources and the need to attract and retain the best available talent in government services.”