ISLAMABAD: The federal fiscal budget for the year 2013-14, presented by Finance Minister Ishaq Dar on Wednesday saw an increase of 10 per cent in the pension of retired government employees.
In a move to support retired employees, the minimum monthly pension amount was also increased from Rs3000 to Rs5000. However, for the first time in years, the salaries of government employees have seen no change.
Terming it a "relief measure" for retired government employees, Dar said, "Despite the austerity drive, we are mindful of the challenges faced by pensioners and to assist them we have decided to increase pensions by 10% from July 1 - with additional relief being provided to low pensioners."
No salary increase
Sources privy to the cabinet meeting which approved the fiscal budget on Wednesday told The Express Tribune, that the federal cabinet was undecided over the matter of increasing government employees' salaries.
For the last five years, pensioners have seen a 15 to 25 per cent annual rise in their pensions with slight variations.
Sources detailed that despite being in a struggling fiscal situation, authorities were considering an increase in the salaries of federal government employees from 7.5 to 10 per cent but later the idea was put aside in favour of pensioners.
The finance ministry had primed two proposals for the government on the matter, sources added.
The first proposal was to link the increase in salaries with the annualised rate of inflation, which was expected to remain in the range of 7.5%.
Subject to approval, this proposal would have increased the federal government's expenditure by almost Rs15 billion.
Had the proposal been approved, over half of government's estimated expenditures for the next fiscal year would have gone in the payment of salaries.
In addition to 650,000 armed personnel, there are approximately 600,000 federal government employees.
Salaries to the military personnel are paid out of the defense budget but the pension cost is borne by the civilian government.
The second proposal was to increase the salaries by 10%, which would have increased the amount of expenditure on federal salaries by Rs20 billion, sources said.
For the next fiscal year, the pension bill has been estimated at Rs171.3 billion and 77.2% of it will be spent on paying the pensions of retired military officers.
Two factors have influenced the provisions pertaining to the salaries of government employees.
The first is the response of the provincial governments, which employ over 2.2 million employees; and secondly, the fact that a 20% increase was already given to the employees of the Federal Secretariat in March this year.
Now, different pay structures have been put in place for the employees who work in the judiciary, military, Presidency, Prime Minister's Secretariat, National Accountability Bureau and those employed in other departments.
Sources said there was also a proposal to merge some of the ad-hoc allowances given during the last three years.
Ad-hoc relief allowance of 50% given in 2010, 15% in 2011 and 20% in 2012 are not merged in the basic pay, at present.
Mergers will not only increase the annual benefits of the employees but would also increase allowances related to house rent and medical expenses.
Secretary Finance promised increase in Employees Salaries
President Employees’ coordination council Chaudhary Muhammad Hussain Tahir expressed his reservations over no increase in the salaries of government employees employees in the federal budget, despite a commitment on it by Dr Waqar Masood Khan.
The council had presented Charter of Demand (CoD) to secretary finance earlier in which they demanded that salaries be increased by 100%, ad-hoc allowances be merged in basic pay, medical allowances be increased and housing subsidy be provided instead of house rent allowance.
Tahir said the finance secretary had assured the council delegation that employees' pay would see an increase considering the rise in inflation rates.
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