ISLAMABAD – The federal government is expected to introduce a salaries’ hike ranging from 10% to 15% in FY 2024-25 budget amidst the challenging backdrop of persistent inflation.
The proposals for wage increases include a suggested 15% to 20% hike for government servants in BPS-1 to BPS-16, while another proposal advocates for a 10% raise across all categories, from BPS-1 to BPS-22, which would elevate the government’s pay bill by Rs80 billion in 2024-25.
The budget will be presented on Wednesday (today).
Earlier, the budget was due on June 8 as presentation of the 2024-25 budget was postponed due to Prime Minister Shehbaz Sharif’s visit to China.
The delay means that the budget is being unveiled after the central bank’s Monetary Policy Committee slashed interest rates by 1.5% to 20.5% from a record high of 22%.
The expected raise, however, may not evoke widespread celebration due to ongoing erosion of purchasing power resulting from rupee devaluation.
The sources say that there may be another relief for the less privileged salaried class as it is expected that the minimum taxable amount may be raised to Rs900,000 per annum from the current Rs600,000 threshold.
The latest reports suggested that the government aims to alleviate the burden on low-income groups.
The move implies that more individuals from the low-income brackets within the salaried class could benefit from income exemption. However, it is speculated that the government might adjust tax rates for those in higher income brackets accordingly.
The deliberation over pay raises for civil servants has been ongoing, despite the additional financial strain it poses amid the current economic challenges. This initiative is deemed necessary to counteract the adverse effects of inflation, which have significantly diminished people’s purchasing power.
Besides it, there are discussions within the finance ministry regarding a revision of the monetization policy, which pertains to the payment of benefits to public servants in cash lump sums.
Although Pakistan has witnessed a decline in annual inflation since January, with the consumer price index (CPI) reaching a 30-month low of 11.8%, the proposed measures, if implemented, will likely be met with mixed reactions from the populace, with some deeming them insufficient.
