The recent announcement of the 9th pay structure for government officials and employees has been the subject of widespread discussion for several days. The discussions and criticisms essentially revolve around four issues—the justification and necessity of the salary increase; concerns about inflation; challenges to the government’s financial capability, and discrepancies with the salary structures in the private sector.
The 9th national pay commission was formed in the mid-2025, nearly a decade after the eighth pay commission. Consequently, a decision has been made to increase the basic pay by 100 to 142 per cent for the existing 20 government grades. Although the decision to increase the pay was made in July, it will not be implemented all at once, but rather in four phases. In the first phase, 40 per cent of the basic pay will be effective from 1 July 2026, 30 per cent in January 2027, another 30 per cent in July 2027, and allowances to be effective from January 2028.
Regarding the rationale of the ninth pay scale, it can be said that since the eighth pay scale, especially in the context of high inflation in recent years, attempts have been made to make necessary adjustments to the pay structure through the new scale. In many other countries, such adjustments to pay scales to keep them up-to-date are routine matters and are done regularly to ensure consistency in real income. Therefore, when it comes to implementing the pay scale, the aspect of capability is much more relevant than that of justification. This is essentially where discussions on the pay scale lie.
The area of concern for people regarding the pay scale discussion is primarily inflation-centric—many believe that an increased money supply in the market could fuel inflation. However, it can be said that in recent times, at least over the past few years, inflation in Bangladesh has been primarily cost-push, meaning that increased costs due to hikes in prices of electricity, gas, raw materials, and other related goods have led to higher production costs, thereby affecting commodity prices. In addition, increased prices of imported goods and raw materials, due to the devaluation of the taka against the dollar, have also added pressure.
There is no doubt that structural weaknesses in market management have further fueled inflation. On the other hand, if an increase in pay results in additional money supply and demand, it will lead to inflation only if there is not a proper balance between this additional demand and supply and production. Moreover, government officials and employees constitute about 2 per cent of the total workforce, so the risk of inflation due to additional demand is minimal.
However, considering the multiplier effect of demand and the alignment in the private sector, there could be some impact, but if implemented gradually, it should not have a significant impact. Besides, there is a concern that intermediaries and beneficiaries in the market system might artificially create supply shortages and raise prices by taking advantage of the new pay scale.
Therefore, if deep oversight of market management is ensured along with enhancing efficiency and dynamics in production and supply systems, the revisions in the pay scale should not exert additional pressure on the market.
Another source of inflation could be the process of financing the pay scale—if loans are taken from domestic sectors (mainly the banking sector) for the adjustment of salaries and allowances, there is a risk of its impact on the market. If revenue collection targets are not met, there is a tendency for the government to borrow from the banking sector. Under the current inflationary circumstances, it is crucial to avoid such borrowing or money printing for pay scale implementation. Additionally, significant cuts in critical budget areas for financial adjustment will not be beneficial for the economy as a whole in the long run.
Thus, the implementation and financing of the new pay scale need to be approached cautiously, coordinating with both domestic and global markets. The government has taken the initiative to implement it in three phases. The implementation of the first phase will be the most challenging. Hence, appropriate management of issues like timing of implementing phases, adding extra phases if necessary, related financing, etc. , is essential.
The biggest challenge related to the new pay scale is the lack of consistency with the private sector's pay structure in many cases. However, a kind of stagnation prevails in the private sector, especially among enterprises related to the industrial and service sectors. The statistics of credit flow and private investment in the private sector do not present a very reassuring picture. Additionally, due to the ongoing power and gas crisis, on the one hand, no new investments are being made, and on the other, the production of existing factories and individual sector enterprises is being disrupted. If the private sector cannot be revitalised, it may affect not only employment or wages and salaries but also revenue collection.
Therefore, besides implementing the new pay scale, there is no alternative to revitalising the private sector by quickly implementing the budget-proposed measures to ease business operations, especially by urgently ensuring the supply of power and gas. Additionally, in the medium term, the private sector should be encouraged to promote positive changes in the wages of low-income workers through the expansion of the minimum wage scope alongside the implementation of the pay scale. It is essential to remember that the private sector is not only the driving force of our country's economy, but the livelihoods of countless families depend on it. Hence, creating the capability for necessary adjustments in the private sector’s pay structure with equal importance as implementing the new pay scale is crucial, particularly in the context of continuous inflation and socio-economic balance.
In the overall administrative management and inflation context, while the adjustment of the pay scale for government officials and employees is a demand of the times, the proper alignment of wages for the vast number of workers engaged in the private sector is equally important. Additionally, attention should be paid to ensuring that no inflationary pressure is created on workers employed in the private informal sector or that excessive disparities do not arise in the economy. Such alignment is possible through efficient revenue collection, well-thought-out expenditure management, and dynamism of the private sector.
* Sayema Haque Bidisha is a professor at the Department of Economics, University of Dhaka
* The opinion is the author's own
* This article, originally published in Prothom Alo print and online editions, has been rewritten in English by Rabiul Islam.