In a big development for public sector workers across Pakistan, the federal government has officially approved a 10% salary increase for government employees and a 7% hike in pensions in the Federal Budget 2025-26. This decision was finalized during a high-level cabinet meeting chaired by Prime Minister Shehbaz Sharif, where the Finance Bill 2025-26 was also given the green light.
The Finance Minister, while presenting the budget in the National Assembly, shared that this increase in salaries will apply to all government employees from Grade 1 to Grade 22. This long-awaited move comes as a sigh of relief for millions of employees and pensioners struggling to make ends meet due to the rising cost of living.
In addition to the basic salary raise, the government has also announced:
- 30% hardship reduction allowance for eligible employees
- Special relief allowance for officers and soldiers of the armed forces
- Increase in special conveyance allowance for special employees, from Rs 4,000 to Rs 6,000 per month
Table of Contents
Key Highlights of Budget 2025-26 for Govt Employees
| Item | Details |
| Salary Increase | 10% for Grade 1 to 22 |
| Pension Increase | 7% for all retired govt employees |
| Hardship Reduction Allowance | 30% for eligible employees |
| Relief Allowance for Armed Forces | Special allowance (within defense budget) |
| Special Conveyance Allowance | Increased from Rs 4,000 to Rs 6,000 |
| Finance Bill 2025-26 | Approved by Federal Cabinet |
Long-Awaited Demand Fulfilled
There were ongoing discussions prior to the budget announcement, with government employees demanding a minimum 50% raise in their salaries due to inflation. The administration had reportedly considered three proposals — 6%, 10%, and 15% increases. Ultimately, a 10% raise was chosen, reportedly due to fiscal constraints.
While the hike isn’t what many employees were hoping for, it’s still seen as a positive step, especially after months of uncertainty. Employee unions had warned of protests if their demands weren’t met, and this raise may help reduce some of that tension — at least temporarily.
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PM Shehbaz Sharif’s Remarks in Cabinet Meeting
During the cabinet meeting, PM Shehbaz Sharif offered Eid-ul-Adha and Hajj greetings to the Pakistani nation and the Muslim Ummah. He also took the opportunity to address key national and international matters.
Speaking on Palestine and Kashmir, he strongly condemned the ongoing human rights violations and called for urgent international intervention. He reaffirmed Pakistan’s historic and consistent support for the oppressed people of both regions.
On the economic front, the Prime Minister highlighted that Rs 400 billion has been added to the national treasury. He credited this to the sacrifices made by the salaried class and the determined efforts of the government.
Another key issue discussed was water security. PM Shehbaz emphasized that no country can be allowed to weaponize water against Pakistan. He praised the proactive approach of the Deputy Prime Minister, concerned ministers, and expert committee in safeguarding Pakistan’s water rights.
Touching on defense and recent regional tensions, he remarked that Pakistan had faced serious threats — both economic and military — but would not be intimidated. “We will surpass our adversaries and make Pakistan stronger than ever before,” he asserted.
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Appreciation for the Finance Team
PM Shehbaz concluded his address by appreciating the Finance Minister and his team for their quick and efficient work on preparing the 2025-26 budget. “This budget was created in record time and reflects our true commitment to the welfare of the people,” he said.
He ended the meeting with a passionate call for unity, urging all Pakistanis to work together toward a brighter, more prosperous future.
Although not as high as some hoped, the 10% pay raise and 7% pension increase is still a step forward for many struggling families. The inclusion of special allowances and conveyance benefits adds extra support for deserving groups, including armed forces and special employees.
As inflation continues to pressure household budgets, government employees will be watching closely to see if this relief translates into real change in their daily lives. One thing is clear — the Budget 2025-26 has set the tone for balancing fiscal responsibility with human-centered governance.
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