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Amidst the murmur of formation of the 8th Pay Commission, a very relieving news is coming out for the central employees. If everything goes according to plan, there can be a bumper increase of up to 66 percent in the basic salary of the employees. This is not a mere matter, but is the result of a special proposal put forward in the important meeting of the National Council (Joint Consultative Machinery) last month. In this proposal, a change has been demanded in the decades old formula for determining salary, which will have a direct impact on your monthly income and standard of living.

Preparations are underway to change the 1956 formula

The structure of pay determination that we see today has a very old foundation. Quoting a report of 'Economic Times', C. Sreekumar, General Secretary of All India Defense Employees Federation, says that at present the formula of 'Three Family Unit' (3 family units) is used in the Pay Commission to decide the basic pay. This rule is not current today, but it was decided in the 15th Indian Labor Conference held in 1956. From then till now, the government has been fixing the minimum wage considering only three members in the employee's family.

Why did the demand for 5 units arise?

Social and family structure has changed rapidly with time. Experts in this matter have a clear argument that in today's era, it is the legal and social responsibility of the children to take care of elderly parents. The trend of nuclear families has also increased, where parents are completely dependent on their working children. In view of this ground reality, employee organizations have raised the demand that the family unit should be increased from 3 to 5, so that the maintenance expenses of the parents can be easily included in the salary.

How will 66% basic pay increase?

The mathematics behind this proposal of employee organizations is very simple and effective. According to the rules, when a family unit increases, there is scope for an increase of about 33.33 percent in the basic salary. In such a situation, if the government accepts the demand of increasing the family units from 3 to 5 (i.e. increase of two additional units), then there can be a huge jump of up to 66 percent in the basic pay of the employees.

How much money will come to your account?

Let us understand with an example what effect this entire exercise will have on your pocket. Suppose at present the basic pay of an employee is ₹ 78,800. At present the Dearness Allowance (DA) is 58 percent and a further increase of 8 percent is possible. Along with this, an annual increment of 12 percent is also added. In such a situation two situations arise:

1. Situation 1 (Old Testament): If the family unit remains only 3, then the fitment factor will be around 1.76. In this situation, the salary of an employee getting basic pay of ₹ 78,800 will increase to at least ₹ 1,38,688.
2. Situation 2 (New Testament): If the government accepts the demand for 5 family units, the fitment factor will jump to 2.42. Once this new factor is implemented, the salary of the same employee with a basic pay of ₹ 78,800 will increase to a whopping figure of ₹ 1,90,676.