30% raise in salaries, 20% in pensions expected
The government is expected to increase public service pay by 30% through temporary benefits and pensions by 20% in the upcoming federal budget in the 2023-24 fiscal year. The Pay and Pensions Commission has recommended the government to consider a 100% increase in medical and transportation benefits for civil servants as well as a 10% increase in casual benefits.
However, a source in the Regulatory Wing of the finance ministry revealed that three proposals regarding increases in salaries and pensions have been prepared, which will be presented in a special cabinet meeting chaired by Prime Minister Shehbaz Sharif. A final decision on the increase will be made at a meeting where selected proposals are presented to parliament along with the budget.
According to sources, the earlier proposal recommended a 100% temporary increase in medical and transport staff, in line with the recommendations of the Salaries and Pensions Committee. In addition, a proposed 10% increase in the amount of benefits. Retired workers may also see a 100% increase in health care costs and a 10% increase in pensions.
The Pay and Pensions Committee has argued that accepting the proposal would not increase the government’s pension bill, and the International Monetary Fund (IMF) would have no objection. Eventually, the workers will be greatly relieved. The second proposal seeks to increase the salaries of all civil servants (grades 1 to 22) by 25%, as well as increase medical benefits and travel allowances. Health benefits for retirees will also increase, accompanied by a 15% pension increase.
The third proposal under consideration provides for a 30% pay increase for staff (grades 1 to 16), and a 20% increase for officers from class 17 and above. At the same time, a proposed 50% increase in health and transportation benefits, as well as a 20% increase in health benefits for pensioners.
Besides, proposals to increase the old age guarantee board (EOBI) pension and minimum wage for employees are under consideration.
While the finance ministry acknowledges the validity of the recommendations of the Salaries and Pensions Commission, the final decision lies with the government.
A source in the finance ministry explained that the recommendations of the commission could not be implemented in the last financial year due to the delay in finalizing the report. This year, despite previous reports, implementation remains a challenge because elections are part of the budget, making it difficult to implement committee recommendations.
The Commission’s report highlighted concerns about high pension costs and the concerns of financial institutions, including the IMF. As a solution, the Commission recommended the introduction of a subsidized or voluntary pension scheme for new recruits in place of the old pension scheme.
