Inflation-aligned pay rise for govt employees from July

Government employees will receive salary increase in the next fiscal year beyond the stipulated 5% annual increment to cope with inflation.

According to finance ministry officials, the upcoming budget will have an announcement in this regard. However, the rate of increase will be determined later. 

This follows the demand for a new pay scale amid runaway inflation caused by the Russia-Ukraine war. Despite the demand, the finance ministry was considering the inclusion of dearness allowance in the budget for the fiscal 2023-24.

However, last week, Prime Minister Sheikh Hasina rejected the idea of dearness allowance and stated that the salary would be increased in line with inflation.

The officials say after the presentation of the budget in parliament, the ministry will determine the rate of increase and after completing the whole process, a gazette may be published in August-September.

Like every time, government employees will get 5% increment on 1 July.

"It may take a month or two to complete the entire process. However, whenever the gazette for the salary increase aligned with inflation is issued, it will be effective from July," said a finance division official.

According to data from the Finance Division, the total number of government employee positions across various ministries and departments is 12.46 lakh. The next budget will allocate Tk77,000 crore for salaries and allowances, including a 5% increment. However, the entire allocation will not be spent in the upcoming fiscal year as there are 2.70 lakh vacant positions.

"As a result, it will be possible to pay the increased salary without requiring an additional allocation," said an official.

In the current budget, the allocation for salaries and allowances was initially set at Tk74,266 crore. However, it was later revised down by Tk1,093 crore.

According to the pay scale announced in 2015, the annual salary increment rate is set at 5%. However, if inflation exceeds 5%, the increment will be adjusted accordingly.

According to officials involved in the budget formulation, both Finance Minister AHM Mustafa Kamal and Finance Division Senior Secretary Fatima Yasmin have advised them to begin working on determining the rate of increase after the budget is presented in parliament.

A finance division official stated that after the budget announcement, the finance minister and the secretary will seek instructions from the prime minister regarding whether the salary increase will occur monthly with the existing 5% increment, taking into account the rate of inflation, or if the rate of increment will be adjusted considering the average rate of inflation.

Furthermore, the finance ministry will also seek guidance on whether the salary increase will be uniform for all grades, from 20th grade to 1st grade, or if the prime minister has a different perspective on the matter.

According to the Bangladesh Bureau of Statistics, the inflation rate was 9.24% in April. Additionally, the average inflation rate for the 12-month period from May of last year stood at 8.64%.

The Finance Division has been implementing increments according to the schedule, as the average inflation rate was between 5% and 6% prior to the Ukraine war. 

However, new rules will be formulated to ensure that government employees receive increments based on either the schedule or the rules, whichever results in a higher increase.