Pakistan’s Finance Ministry announced a 10% salary increase for federal employees and a 30% Disparity Reduction Allowance (DRA), alongside a 7% pension hike, as part of the 2025-26 budget.
The Finance Ministry’s July 4 notifications grant a 10% salary increase for federal employees from Grades 1 to 22, including armed forces and civil servants, effective July 1, 2025. The raise, taxable and admissible during leave (except extraordinary leave), does not affect pension or gratuity calculations. The 30% DRA applies to employees already receiving it, based on the 2017 Basic Pay Scale for those hired after July 2022, as per the ministry. Retirees will see a 7% pension increase.
The salary hike follows significant raises for top officials. In May 2025, the salaries of the Senate Chairman and the National Assembly Speaker increased from Rs 205,000 to Rs 1.3 million per month, with a Rs 650,000 sumptuary allowance, as per a notification dated May 29. Federal ministers and ministers of state now earn Rs 519,000, matching that of MNAs, up from Rs 180,000, as per an ordinance signed by President Asif Zardari. These raises, effective January 2025, contrast with the broader 10% hike, sparking X debates on equity.
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The pay increases, affecting 1.2 million federal employees, as per PBS data, aim to ease inflationary pressures, with Pakistan’s CPI at 11.8% in June 2025, as reported by the State Bank. The measures support Pakistan’s $7 billion IMF program, with reserves at $14.51 billion, though fiscal strain from Rs26 billion debt repayments looms.
The 10% salary hike and 30% DRA reflect Pakistan’s efforts to balance employee welfare with fiscal reforms, impacting millions amid economic challenges. The contrast with elite pay raises fuels public debate and highlights the need for transparent governance.
