In a major development that will bring some relief to the financially burdened government employees, the Federal Cabinet has officially approved a 10% salary increase for all government employees in grades 1 to 22 under the Finance Bill 2025-26. The decision was finalized during a high-level cabinet meeting chaired by Prime Minister Shehbaz Sharif, where the budget proposals for the upcoming fiscal year were greenlit. Alongside this, a 7% increase in pensions for retired employees has also been approved, a move that reflects the government’s intention to cushion citizens against inflationary pressures.
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During the budget speech, Finance Minister highlighted that this pay raise is part of a broader relief package aimed at helping the salaried class, which has been hit hard by the rising cost of living. For months, there had been discussions on whether salaries would be raised by 6%, 10%, or even 15%, but in the end, the cabinet settled on a 10% raise. This decision comes after growing pressure from government workers, many of whom were demanding at least a 50% increase due to the sharp rise in inflation. Employee unions had even warned of protests if their concerns were ignored, arguing that stagnant wages had made it nearly impossible to keep up with basic household expenses.
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In addition to the salary and pension hike, a 30% hardship reduction allowance will also be provided to eligible government employees. This allowance aims to offer extra support to those serving in tough conditions or remote areas. Furthermore, a special relief allowance has been sanctioned for the officers and soldiers of the armed forces. However, it’s important to note that this expense will be covered from within the existing defense budget for FY 2025-26, indicating no additional burden on the national exchequer.
There’s more good news for special needs employees. The government has also increased the special conveyance allowance for differently-abled employees, raising it from Rs4,000 to Rs6,000 per month. This step acknowledges the additional challenges such individuals face and is a welcome gesture towards inclusion and support.
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Prime Minister Shehbaz Sharif, addressing the cabinet after approving the budget, expressed deep appreciation for the sacrifices made by the salaried class and retirees over the past 18 months. He stated that the nation has faced immense economic challenges, but the resilience shown by the people has kept the country on track. The Prime Minister also emphasized the importance of national unity and hard work, saying that Pakistan is now in a position to move towards progress and development.
He praised the efforts of the finance minister and the budgetary team for preparing a comprehensive and timely Federal Budget 2025-26. According to him, the budget reflects the current realities and aims to address the pressing needs of common citizens, especially government workers.
On a broader front, the PM also addressed critical issues like the atrocities in Palestine and Kashmir, strongly condemning global inaction and reaffirming Pakistan’s unwavering support for the oppressed. He also touched upon matters like water security, making it clear that Pakistan will never allow its water rights to be compromised.
Internally, PM Shehbaz mentioned that Pakistan has contributed Rs400 billion to the national treasury recently, which he described as a sign of economic recovery. He encouraged everyone to play their part in helping the nation rise, stating, “Now is the time to move forward together.”
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Final Thoughts
The 10% salary increase for government employees and 7% pension hike mark a significant shift in the government’s approach to supporting its workforce. While some argue that it still falls short of fully addressing inflation, it is a much-needed step in the right direction. Additional allowances and benefits reflect an understanding of the hardships faced by various segments, including armed forces personnel and specially-abled employees. As the country navigates through internal and external challenges, the government’s message is clear: unity, resilience, and shared responsibility are key to a stronger Pakistan.