8th Pay Commission: Higher fitment factor doesn't mean a bigger real hike in salary - here's why

Ahead of the 8th Central Pay Commission (CPC), there is a lot of speculation about the expected fitment factor, which is a multiplier used by pay commissions to calculate the revised basic salary.

While it may take several months for the 8th Pay Commission report, aspiring or existing Central Government employees should know that the fitment factor alone doesn't fully convey the real hike in pay while taking inflation into account.

An analysis of the fitment factors in the 6th and 7th CPCs shows that the real hike in pay could be lower even when the fitment factor is higher than the previous pay commission. In this article, we have tried to explain why this happens.

Analysing fitment factors of 6th and 7th CPCs

In contrast, it is estimated by various reports that the fitment factor in the 6th CPC was approximately 1.86. However, the real hike in pay in the 6th CPC was 54%.

But, how?

When calculating salary hikes, the Pay Commission takes both the existing salary level and inflation adjustment into account. In case of Central Government employees, their real pay is protected by providing the dearness allowance. So, a portion of the fitment factor reflects adjustment for the dearness allowance or inflation, and another portion reflects the real pay hike.

The 7th CPC's 2.57 fitment factor could be broken into two parts for understanding

First, 2.25 of 2.57 accounted for the merging of the then existing basic pay with DA, which was assumed at 125% of the basic pay on January 01, 2026. Such a merger ensured inflation-based adjustments in the revised pay structure of the 7th CPC.

The second part, i.e., 0.32, or the balance portion of the fitment factor, represented the real increase in pay recommended by the 7th CPC. It was calculated as 2.57 ÷ 2.25 = 1.1429, or 14.2%, over the merged pay Basic+DA.

The 7th Pay Commission noted this in its report, saying: "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)."