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New Delhi: Preparations for the 8th Pay Commission have started. At present, it is difficult to say which formula the new Commission will adopt to fix the minimum wage. But looking at the history of the last six pay commissions, it seems that the 8th pay commission can also use the same old rules of the 15th Indian Labour Conference (ILC). Interestingly, many employees are not aware that from the 2nd pay commission to the 7th pay commission, the minimum wage has been based on these criterias.
The purpose of the 15th ILC criteria created in 1957 was to fix the salary of a labourer and his family to meet all the basic needs. Let's look at this in detail:
According to the minimum salary criteria, a labourer's family was considered to be of 4 members—husband, wife and two children. In this, a total of 3 “consumption units” are created, on the basis of which expenses are decided.
Food needs - An ordinary Indian adult was considered to consume 2700 calories, 65 grams of protein and 45-60 grams of fat per day. It should contain at least 20 percent of animal-based proteins such as milk, eggs, fish and meat.
Clothes: Approximately 72 yards of cloth (about 5.5 meters per month) were considered necessary for a family.
House rent: According to every person, the need for clothes has been kept at 18 yards in a year. A common labourer has a family of four people, so the whole family needs 72 yards of cloth in a year. 72 yards of cloth is about 66 meters. If you divide it into 12 months, then every month the family should get about 5.5 meters of cloth. This is the monthly cloth needs of the average workers' family. It was advised to add 20% of the minimum wage expenses on fuel, electricity and other expenses.
From the 2nd pay commission to the 7th pay commission, every commission has used these standards in some form or another. The only difference was that each commission implemented it slightly differently according to the economic conditions of its time.
2nd Pay Commission
This commission made the first scientific calculation of the minimum wage by taking the ILC formula. But at that time the country's per capita income was very low, so the Commission suggested reducing the salary received as per the account.
3rd Pay Commission
This commission did not adopt the ILC standards directly, but modified them slightly. The Commission agreed that lifestyle is changing, expenses are changing, so it fixed the salary by adding some fitments and changes.
4th Pay Commission
It did not create a new minimum wage base by itself. Instead, it took note of the salary fixed by the 3rd Commission and increased it according to the expenditure (inflation index) increased over time.
5th Pay Commission
This commission was thinking a bit differently. It said that the salaries of government employees should not lag far behind the average income of the country. Therefore, it did not base the ILC directly, but used a formula based on the ratio of income.
6th Pay Commission
This commission considered the ILC criteria as the base formula. Previously, after withdrawing salary as per ILC, he added an additional 25% to the base salary.
7th Pay Commission
The 7th Commission clearly stated that the ILC criterion is the most scientific method because it determines the salary directly based on the needs of the family. It is calculated by adopting all the 7 components of the ILC. Food, clothes, home, fuel, electricity, miscellaneous expenses and skill factors.
The direct difference between 7th and 8th pay commission
| Pay Commission | Fitment Factor | Minimum Basic Pay |
|---|---|---|
| 6th CPC | 1.86x | ₹7,000.00 |
| 7th CPC | 2.57x | ₹18,000.00 |
| 8th CPC (Expected) | 1.92–2.08x | ₹34,560–₹37,440 |
The fitment factor is the same multiplier, which changes the entire salary structure. Meaning, it is a number by which your old basic salary is multiplied, and that becomes your new basic salary. Suppose if the basic salary of an employee is now 30000 rupees then-
If the fitment is 1.92:30000 Rupees×1.92 = 57600 Rupees New Basic
When fitment is 2.08:30000 Rupees×2.08= 62400 Rupees New Basic
That is, the basic automatically increases a lot as the fitment increases.
Now that the 8th Pay Commission has started its process, it will be interesting to see if it too follows the old formula or comes up with a new method. But tradition so far suggests that ILC norms have been the backbone of fixing the minimum wage, so they are most likely to join the 8th commission as well.
