The Union Cabinet on Thursday approved the formation of the 8th Pay Commission, which will take up the issue of increasing salaries of Central government employees and payments to pensioners.

"Prime Minister Narendra Modi has approved the formation of 8th Central Pay Commission for the benefit of all central government employees and pensioners," Union Minister Ashwini Vaishnaw announced, while briefing the press after the Cabinet meeting.

"Since 1947, seven pay commissions have been formed. The 7th Pay Commission came into effect in 2016. Its tenure will conclude in 2026. By deciding to form the 8th Pay Commission in 2025, we have sufficient time to receive recommendations well before the completion of the period of 7th Pay Commission," Union Minsiter Vaishnaw said.

"This process will involve wide consultations with state governments, central government, PSUs and different stakeholders. A chairman and two members will also soon be appointed for the commission," he said.

According to officials, the move is expected to benefit around 50 lakh central government employees, including defence personnel, along with more than 65 lakh pensioners.

Pay commissions are generally formed once in every 10 years to recommend the fitment factor, and other modalities for the revision of salaries of employees and pensions paid to the retirees.

The 7th Pay Commission was set up by the Manmohan Singh government in February 2014, while its recommendations were implemented by the government from January 2016 onwards by the Modi government.

The announcement on the formation of the 8th pay Commission comes amid persistent demands from the employee unions and staff associations, who have been calling for the formation commission at the earliest so that the salary revision takes from January 2026 onwards.

"Since the last pay hike came into effect from January 1, 2016, the next salary should be revised from January 1, 2026 as the hike in salary of Central government staff takes place after 10 years," All India Railwaymen's Federation Secretary-General Shiv Gopal Mishra said.

Mishra, who is also the secretary (staff side) of the National Council-Joint Consultative Machinery or NC-JCM—an official platform to resolve the disputes between the government and its staff through dialogue.

He said that the employees were expecting a fitment factor of "at least 2.86" to be recommended for the salary revision. The fitment factor of 2.86, as demanded by AIRF, would mean a 186 per cent hike in the salaries. The 7th Pay Commission had raised the wages and pensions of Central government employees based on a fitment factor of 2.57.