8th pay commission: Highest real increase in pay was not in 7th CPC; here's why

In the run-up to the formation of the 8th Central Pay Commission (CPC), it is generally believed that the 7th pay commission has already provided a decent hike in wages, hence a very big increase in pay from the new panel may not be expected.

However, central government employees might find it surprising to note that the 7th CPC didn't provide the highest real increase in pay.

‘Real pay’ hike history

The history of pay hikes by multiple pay commissions since independence shows that the highest increase in real pay was provided by the 6th pay commission.

Except for the 2nd pay commission, all pay panels before the 7th CPC provided over 20% increase in real pay. While the 6th CPC offered 54% real increase in pay, the 7th pay commission provided only 14.3% real hike.

“...basic pay at any level on 01.01.2016 (pay in the pay band + grade pay) would need to be multiplied by 2.57 to fix the pay of an employee in the new pay structure. Of this multiple, 2.25 provides for merging of basic pay with DA, assumed at 125 percent on 01.01.2016, while the balance is the real increase being recommended by the Commission. The real increase works out to 14.2 percent (2.57÷2.25 = 1.1429),” the 7th pay commission said in its report.

The 3rd, 4th and 5th pay commissions offered 20.6%, 27.6% and 31% real increase in pay respectively to central government employees.

Source: 7th CPC

What is expected from the 8th CPC?

As the countdown for the formation of 8th CPC has begun, central government employees and pensioners are hoping for a pay hike that would ensure a "decent and dignified living wages'. However, real pay hike history provides a case for employees to expect more than just a “decent” hike in wages.

It is expected that the new pay panel will be formally set up in April 2025.