8th Pay Commission: Revisiting 7 benefits of 7th CPC's new pay structure for Central Govt Employees

The terms of reference and members of the 8th Central Pay Commission (CPC) are yet to be decided. It is expected that the decision on this matter will be taken soon by the Union Cabinet, and the new pay panel may start its work from April.

One of the important tasks before the 8th Pay Commission will be to examine the 7th CPC’s new pay structure that replaced running pay bands with a pay matrix.

The 7th CPC had recommended a very refined pay structure. However, Central Government employees would eagerly wait to see if the 8th CPC would continue with the current Pay Matrix or recommend a new system.

As we gear up for the 8th CPC, employees may like to revisit the benefits of the new pay structure listed by the 7th CPC in their report to the Government.

7 benefits of 7th CPC’s new pay structure

1. The new pay structure subsumed pay and pay bands into one composite level.

2. The new pay structure of the 7th CPC corrected the variable spacing between adjacent grade pay and pay bands. It ended the disparity between Pay Band-3 and Pay Band-4 by the process of normalisation. This also helped address the demands to upgrade grade pay received in the 7th CPC on the grounds of disparity between various pay bands.

3. By introducing a fixed fitment factor of 2.57, it simplified the fixation of revised pay in the new pay matrix, requiring no further calculations. “The basic pay being drawn by any person on the date of implementation is to be multiplied by a factor of 2.57 and the figure so obtained will be matched for the closest figure in the level pertaining to his/her existing grade pay and fixed there,” the 7th CPC report said.

4. It resolved the issue of differential entry pay by recommending a minimum salary of ₹18,000.

5. The new pay matrix made it easy to visualise career progression. “The employee can traverse both vertically within a level in the new pay matrix by way of annual progression, and horizontally across levels by way of MACP as well as on regular promotion. This will enable him/her to visualise the career path across levels and span of service.”

6. The new matrix also provided greater visibility and transparency for actual pay drawn as compared to the earlier system of pay scales or pay bands. The Pay Matrix also depicts the exact amount payable to a person after several years spent in service in each level.

7. The new pay matrix is easy to administer. The 7th CPC noted that in line with the principle of greater transparency, the new pay matrix will provide an unambiguous and complete view of the pay system in the Government of India.

“The pay matrix can be gainfully analysed to provide crucial data on trends in pay progression, number of personnel populating each level, number of personnel entering and retiring at various levels, promotional trends of various cadres, financial outgo at various levels, and so on. Hence, it can act as a powerful tool to bring in financial management reforms,” it said.