Study reveals burden of new recruits on national budget

Rs49, Rs136, Rs245 million will be required by state to afford a Grade-17 officer for a period of 30 years

LAHORE:

A recent study conducted by the Pakistan Institute of Development Economics (PIDE) has brought to light the significant financial burden placed on the national budget by newly recruited individuals ranging from Grade 1 to Grade 22.

The study, titled "Lifetime Cost of Public Servants," also uncovered that politicians often make promises of public employment without taking into account the government's role in creating new opportunities rather than solely offering jobs.

However, the study also suggests that by providing employment opportunities, particularly within their own political party or patronage network, politicians can build a base of supporters who are more likely to vote for them in elections.

According to the study's findings, the net present value of a Grade-1 employee hired in July 2023 would amount to Rs8, 17, 27 million. This includes various components such as salary, pension, perks, benefits, and operating costs. In a similar vein, it was calculated that the state of Pakistan would need to allocate Rs49 million for a Grade-17 officer over a thirty-year period.

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These figures raise questions about whether the country possesses sufficient revenue streams to support this compensation for the next 30 years. The statement underlines the importance of pausing and reflecting on the implications of adding a new worker to the system. It is crucial to remember that the state of Pakistan and the government will be responsible for covering the cost through taxation.

The statement emphasizes the necessity for long-term planning to help Pakistan break free from its debt spiral. It suggests that the institute carefully consider the cost-effectiveness of retaining an employee before making a decision.

"PIDE has proposed a prudent and cost-effective approach before making decisions about retaining employees. This way, the institute can assess how it can afford to sustain the person's employment throughout their working life."

The statement underscores the need for governments to assess the long-term financial consequences of immediate job creation and find a balance between short-term benefits and sustainable fiscal policies. While immediate job creation can have positive effects, it is equally important to recognize that rapid job creation can have negative repercussions, the press release stated.