New pay commission to curb pressure of inflation

A commission has been formed to fix a new pay scale for government and autonomous employees and officials after a decade. Former finance secretary and Palli Karma-Sahayak Foundation (PKSF) chairman Zakir Ahmed Khan has been made the chairman of the commission. The commission has been asked to submit a report within six months.

The decision to form the commission was taken in the advisory council meeting held yesterday, Thursday. Chief adviser Dr. Muhammad Yunus presided over the meeting. The number of government officials currently stands at nearly 1.5 million.

Following the meeting, press secretary Shafiqul Alam said in a press conference Thursday afternoon that a pay commission was formed after 10 years. The country’s inflation rate already had crossed the double digits during the tenure of the previous government. Although the inflation rate came down to 8 per cent last month, the pay scale has not yet been properly adjusted in line with inflation. That is why the government believes a new pay scale is necessary.

Bangladesh Secretariat Officers-Employees Combined Council president Md Badiul Kabir and secretary general Nizam Uddin have expressed gratitude to the interim government for the initiative to pay commission.

However, some economists have questioned the justification of prioritising the formation of a new pay commission despite the economy facing multiple challenges—such as slow revenue collection, reduced investment and employment, risks in export trade due to retaliatory tariffs, and stagnation in development activities. According to them, this move could pave the way for increased operational expenditure in the budget, thereby creating additional pressure.

Discussions over dearness allowance for government employees began in November 2024, after the interim government assumed office. In January 2025, a committee was formed to work on the allowance. However, following sharp criticism, the government backed off. Later, a special benefit for government employees was introduced in the current fiscal year’s budget, which led to a slight increase in salaries.

The last pay commission before this was formed in 2013. Former Bangladesh Bank governor Farashuddin was the chief of this commission. A new pay scale took effect in 2015 on the basis of the recommendation from the commission doubling the salary and allowances of the government employees.

The commission had recommended two methods for increasing salaries and allowances annually. First, by adjusting them in line with inflation and second, raising them by 5 per cent every year. At the time, it was stated that there would be no need to form a new pay commission again.

Speaking regarding this to Prothom Alo former BB governor Farashuddin said, “We showed at the time that implementing this pay scale would not lead to any budget deficit. However, the previous government could not fully implement either of the two proposed methods for annual salary and allowance increases. At present, high inflation persists in the country, causing a significant rise in expenses. As a result, many officials and employees are struggling to meet their necessary costs. Considering all this, it’s quite reasonable to form a new pay commission now.”

Mohammad Farashuddin further said that at this moment, the government’s top priority in terms of the economy should be increasing revenue collection. None of the past governments have been able to collect taxes properly from those who are supposed to pay. Without boosting revenue collection, it will be difficult to implement the recommendations of a new pay commission. On the other hand, implementing only 68 per cent of the annual development plan (ADP) is also unacceptable in any way.

The new pay commission will recommend several issues including a raise in the salary and allowances of government employees and officials. If the salaries and allowances are increased as per the recommendation, the government may need an additional fund of several billion takas. This will have to come from the allocation for operating expenses.

However, the government's revenue collection performance is not satisfactory. In the 2024–25 fiscal the National Board of Revenue (NBR) faced a shortfall of around Tk 930 billion, the highest on record. During this period, NBR collected a total of Tk 3.71 trillion from its customs, VAT, and income tax wings, against a revised target of Tk 4.635 trillion.

The NBR contributes over 80 per cent of the budget’s domestic financing. But due to the lack of reforms in the revenue sector, the expected revenue is not being collected from internal sources. Amid this situation, expenses are set to increase further with the introduction of a new pay commission.

Speaking to Prothom Alo regarding this, World Bank’s lead economist at the Dhaka office, Zahid Hussain said that with so many challenges in the economy, including the stagnation in investment, a slowdown in employment, sluggish revenue collection, and poor implementation of the ADP, can increasing the salaries and allowances of government employees really be a priority?

He said that under the pay scale implemented in 2015, government officials and employees already receive quite attractive salaries and allowances, which are competitive with those in the private sector.

Zahid Hussain, “I do not think there is any need to form a pay commission in the current situation. The government is already struggling to meet essential expenses in the budget, yet it is creating scope for additional expenditure.”