Expenditure on salaries, allowances of govt employees increased fourfold over 15 yrs

The government will begin implementing a new pay scale for public officials and employees from 1 July.

Under the new arrangement, employees will receive 50 per cent of the additional amount recommended by the Ninth Pay Commission over the existing basic salary.

This will mark the first phase of the salary increase. The government will need to allocate an additional Tk 300-350 billion (30,000-35,000 crore) in the next fiscal year’s budget for this purpose.

Every year, the government must allocate a substantial amount in the national budget for the salaries and allowances of public officials and employees. This allocation continues to rise annually.

At present, there are 1.4 million (14 lakh) government officials and employees in the country. In addition, 900,000 retired government employees receive pension benefits.

Under the current pay structure, employees receive house rent allowance, transport allowance, medical allowance, festival bonuses and Pahela Baishakh allowance in addition to their basic salaries.

The government must allocate an amount almost equal to the basic salary expenditure to cover these allowances.

According to sources at the Ministry of Finance, government allocations for salaries and allowances have increased nearly fourfold over the past 15 years.

Put more simply, allocations for salaries and allowances have risen by 275 per cent over one and a half decades. In the next fiscal year, the government will need to allocate more than four times the amount spent 15 years ago.

This means the government’s expenditure on salaries and allowances for public officials and employees continues to increase steadily, placing growing pressure on budget management.

In this regard, Zahid Hussain, former lead economist at the World Bank office in Dhaka, told Prothom Alo, “The government faces a dilemma regarding salary increases for public officials and employees. On the one hand, there is pressure to raise salaries; on the other hand, the government must also consider how it will manage the budget if salaries are increased.”

He added, “Once the government raises salaries in line with the recommendations for public officials and employees, the increase becomes permanent. Therefore, the government cannot consider only one fiscal year when arranging additional funding; it must also think about subsequent fiscal years.”

Each year, the government incurs both development and operational expenditure through the national budget.

Development expenditure mainly takes place through projects and accounts for roughly one quarter of the budget. The remainder constitutes the government’s operational expenditure.

After allocations for interest payments on domestic and foreign loans, salaries and allowances represent the largest expenditure item.

In other words, salaries and allowances for public officials and employees have now become the second-largest area of government spending.

The government allocates separate funds in the budget every year for the salaries and allowances of public officials and employees.

The salary component covers basic pay, while the allowance component includes house rent, transport, medical and other allowances.

According to budget documents from the Ministry of Finance, the government allocated Tk 223.95 billion (22,395 crore) for salaries and allowances in fiscal year 2011–12.

Allocations for this sector increased every year thereafter. Five years later, in fiscal year 2016–17, the allocation exceeded Tk 500 billion (50,000 crore). By fiscal year 2022–23, it had surpassed Tk 750 billion (75,000 crore).

In the current fiscal year, the government has allocated Tk (841.14 billion) 84,114 crore for salaries and allowances for public officials and employees.

Once the implementation of the new pay structure begins, allocations for this sector are expected to exceed Tk 1000 billion (100,000 crore) in the next fiscal year.

The government will begin implementing the new pay structure for public officials and employees from 1 July.

The incumbent government is considering the recommendations made by the committee led by Cabinet Secretary Nasimul Ghani in implementing the revised structure.

The committee has recommended implementing the new pay structure in three phases over three fiscal years.

During the first two fiscal years, employees would receive 50 per cent of the revised basic salary in each phase, while allowances would be provided in the third fiscal year.

Prime Minister Tarique Rahman has given policy-level approval to the proposal.

Last week, Prime Minister Tarique Rahman chaired two meetings at the Secretariat concerning the 2026–27 national budget.

Sources said the meetings granted policy-level approval for the salary increase proposal. Based on that decision, the committee led by Nasimul Ghani is meeting again today, Wednesday.

Nearly a decade after the Eighth Pay Commission, the former interim government led by Muhammad Yunus formed a new Pay Commission to prepare a revised salary structure for public officials and employees.

The 23-member Pay Commission, led by former Finance Secretary Zakir Ahmed Khan, submitted its report containing recommendations for salary and allowance increases to then Chief Adviser Muhammad Yunus on 21 January.

The proposed pay structure recommended increases ranging from 100 per cent to 140 per cent across different grades.