The year 2025 has started with gifts for central government employees. First the good news of increase in dearness allowance (DA) and now the approval for the formation of the Eighth Pay Commission—in the midst of all this, a new discussion is gaining momentum. Is the government going to implement the system of performance-based pay (Performance Related Pay) on the lines of the private sector in government jobs as well? This question has now become a matter of curiosity and debate among central employees.

Performance based pay: Not new, but an unfulfilled dream so far

In the private sector, the efficiency and performance of employees is the basis for their salary hike or bonus, but no such structure has been fully implemented in government jobs so far. However, this concept is not new. The matter of variable salary hike was raised for the first time in the Fourth Pay Commission. After this, this issue was also discussed in the Fifth, Sixth and Seventh Pay Commissions, but it did not get concrete form. Now with the Eighth Pay Commission, a big step in this direction is expected. According to sources, the government is considering implementing the PRP i.e. Performance Related Pay Model.

This discussion has intensified after the Union Cabinet recently gave the green signal to the formation of the Eighth Pay Commission. A senior official said on the condition of anonymity, “This time there is a plan to include performance in the salary structure. Its purpose is to encourage those who do good work and increase efficiency.” This simply means that employees who perform their responsibilities better will get the benefit of a higher salary increase, while those with poor performance will not benefit as much.

What will be its benefits?

If this system is implemented, many positive aspects can come to the fore. First, it will promote a sense of accountability and competition among government employees. Secondly, the quality of the government’s functioning will improve, which will also prove beneficial for the general public. A government employee, who has been in service for the last 15 years, said, “If hard work is rewarded, then the enthusiasm to work will double. Right now, the rules are the same for everyone, whether they work or not.” Experts also believe that this step can make the government system as efficient as the private sector. A Delhi-based policy analyst said, “Performance-based pay will not only increase the productivity of employees, but it will also ensure better use of taxpayers’ money.” Now new hope after DA hike Recently, the central government had announced a 2 percent increase in dearness allowance for central employees and pensioners, after which the rate of DA has increased to 55 percent. This decision benefited about 50 lakh employees and 65 lakh pensioners. Now the news of change in the salary structure under the Eighth Pay Commission has further fueled the hopes of the employees. A junior officer expressed happiness and said, “First the DA was increased, now if the salary is also linked to performance, it will be a double bonus for us.” Challenges are also not less
However, implementing this proposed system will not be so easy. The biggest challenge will be to prepare an impartial scale to measure performance. Will there be the same criteria in every department or will different rules be made for different areas? Also, there is a possibility of opposition from employee organizations. A trade union leader warned, “If this rule causes bias or discrimination, we will strongly oppose it.”

What next?

At present, the Eighth Pay Commission is busy in its preliminary preparations. According to sources, its formal outline may come out in the next few months. If the PRP model gets the green signal, it will be a revolutionary change in the history of government jobs. It can start a new chapter not only for the employees but also for the entire administrative structure.

While this initiative of the Central Government is creating enthusiasm among the employees on one hand, it is also raising the question whether performance will now really become the ‘last word’ in government jobs? Only time will answer this.