As the federal budget 2025–26 approaches, hopes are rising among public sector workers across Pakistan. Sources within the Ministry of Finance reveal that the government is considering a 10% to 15% increase in salaries and pensions for government employees.
This possible hike is part of broader efforts to offset the burden of record-high inflation and meet IMF conditions without creating more public unrest. The final announcement is expected in the National Assembly session next month.
The Federal Board of Revenue (FBR) has also proposed a realignment of the tax slab to provide relief to lower-income groups, though final approval is still pending.
Why the Salary Increase Matters
Public servants—especially teachers, police, and clerical staff—have consistently raised concerns about rising costs. With food, fuel, and electricity prices climbing, real income has sharply declined for most households.
In major cities like Lahore and Islamabad, employees recently staged small-scale protests demanding pay increases. They argue that a 15% salary bump would only help maintain the status quo, not improve living standards.
Meanwhile, provinces such as Sindh and Punjab are working on their own salary adjustment proposals. Punjab’s finance department has reportedly recommended a uniform increment policy, as seen in the 2024–25 Punjab Budget.
The Pakistan Economic Survey 2024 also stressed the need for public sector reforms, better compensation, and retention of skilled staff. You can read more about its key findings here on PakMirror.
Impact on Private Sector and Broader Economy
The public pay raise is also expected to pressure private companies to offer better salaries. Small and mid-size enterprises (SMEs), especially in Karachi, fear losing talent to the public sector.
However, some economic experts warn that this move might strain the fiscal deficit further if not balanced with revenue reforms. According to The Express Tribune, any salary increase must be aligned with better tax collection and reduced wasteful spending.
Additionally, the salary rise could boost consumer spending and stimulate growth in retail and housing sectors, offering hope for Pakistan’s sluggish economy.
You can follow more updates on this story from PakMirror’s budget tracker.
