The Union government recently confirmed the establishment of the 8th Central Pay Commission (CPC) in 2026. The decision came as a pleasant surprise for central government employees who had been advocating for it for a long time.
One such report by The Economic Times says the minimum basic pay of central government employees may go up from the current ₹18,000 to ₹51,480 at a fitment factor of 2.86. While such a hike may be possible, it will take several months from now for the actual details to emerge.
Trends from past pay commissions: How salaries increased
Since independence, there have been seven pay commissions. The 1st CPC was constituted in May 1946, and the most recent pay commission (7th CPC) submitted its recommendations in 2014-15.
A look at the recommendations of the previous pay commissions shows the following trends:
First, all previous pay commissions focused on simplifying and rationalising the pay structures, resulting in the reduction of the number of pay scales as well as the compression ratio.
For instance, the third pay commission reduced the number of pay scales from 500 to 80. The sixth pay commission reduced the number of pay scales from 35 to 19.
The compression ratio is the ratio of the maximum salary drawn by the secretary to the Government of India to the minimum salary drawn by the lowest employee in the central government.
Minimum and maximum salaries from 1st to 7th pay commissions
| CPC | Minimum pay (₹) | Maximum pay (₹) | Compression ratio |
|---|---|---|---|
| 1st | 55 | 2000 | 36.4 |
| 2nd | 80 | 3000 | 37.5 |
| 3rd | 196 | 3500 | 17.9 |
| 4th | 750 | 8000 | 10.7 |
| 5th | 2550 | 26000 | 10.2 |
| 6th | 7000 | 80000 | 11.4 |
| 7th | 18000 | 225000 | 12.5 |
Source: 7th CPC report
Second, salaries of central government employees have gradually increased due to recommendations of each previous pay commission.
However, the highest real increase in pay came due to the 6th pay commission when it jumped by 54%, according to a report by the Institute of Economic Growth, New Delhi published in 2019.
| CPC | Real increase in pay |
|---|---|
| 2nd | 14.20% |
| 3rd | 20.60% |
| 4th | 27.60% |
| 5th | 31% |
| 6th | 54% |
| 7th | 14.30% |
Source: Pay Commissions: Fiscal Implications, a study by the Institute of Economic Growth in 2019
Third, pay structures have also changed from one CPC to another. Before the 5th pay commission, most employees received salaries based on individual pay scales.
As per the 7th CPC report, there was no significant changes in the pay structure until the fourth CPC, which introduced the concept of running pay scales in a limited way for Defence forces. For others, individual pay scales continued till the firth CPC.
However, the sixth CPC recommended running pay bands and grade pay for both civilians as well as defence forces. But the 7th CPC ended all previous pay bands and grade pay system. It introduced a new pay matix.
“The status of the employee, hitherto determined by grade pay, will now be determined by the level in the pay matrix,” the 7th CPC report said.
Going by past trends, central government employees may expect further simplification of the pay matrices and a hike in their minimum as well as maximum salaries.
