Ministry withholds 150% allowance

ISLAMABAD:
The Ministry of Finance on Friday withheld a notification for 150% executive allowance for the bureaucrats as it planned to give a need-based allowance instead of making it part of the salary of every officer serving in the federal government.

However, the Ministry of Finance did notify the merger of five ad hoc allowances into the basic pay scale of federal government employees and the new 15% ad hoc allowance for fiscal year 2022-23, which began on Friday. The government also notified an increase of 15% in pensions.

The ministry was expected to notify the 150% executive allowance for the civil servants serving in Grade 17 to 22 at the Pak-Secretariat – the seat of the federal bureaucracy.

Headed by Prime Minister Shehbaz Sharif, the federal cabinet on June 10 had approved the 150% raise for the federal bureaucracy in line with the similar benefits in the Punjab province.

However, some had questioned the rationale of giving the allowance at a time of severe economic crunch.

Sources said that the finance ministry raised certain issues before notifying the allowance after it received requests for the 150% executive allowance from almost every other department.

Before implementing the increase in salaries, the ministry first wanted to decide the modalities of the special package. It also wanted clarity whether the beneficiaries of the executive allowance would also be entitled to the 25% disparity reduction allowance.

A committee may be constituted to work out the modalities aimed at limiting temptations for
such benefits.

The rationale behind giving the 150% executive allowance was to make the Pak Secretariat attractive for the officers serving in the provincial capitals, according to a senior finance ministry official.

He said that the finance ministry was in favour of giving the special package to only those who were serving at the specific posts.

Another official said that if other departments also eventually got the 150% allowance, then it would defeat the purpose.

The salaried class, irrespective of his or her income level, has been adversely affected by the double-digit inflation. The inflation rate in June was recorded at 21.3% – the highest level in over 13 years. The government faces a severe fiscal crunch and has cut some critical expenditures in the revised budget for fiscal year 2022-23. It was probably for the first time in history that the proposed budget allocations were rationalised after their presentation and before final approval by the
National Assembly.

The government notified the 15% increase in pensions and also revised the budgetary allocations.

It increased the pension bill to Rs609 billion. It included Rs395 billion for military pensions and Rs125 billion for civilian pensions.

The government also allocated Rs79 billion for increase in pensions, of which nearly Rs59 billion would go to the military pensions.

The finance ministry set aside another Rs10 billion for the federal pension fund, reducing the allocation from Rs100 billion proposed
on June 10.

The cost of running the civil government was estimated at Rs553 billion, slightly higher than the June 10 estimate.

The finance ministry also revised the pay scales of federal government employees, adjusting those to the 2022 salaries after it merged five ad hoc allowances granted from 2016 to 2021.

The 2022’s 15% increase in salaries has been given as an ad hoc allowance but it will eventually be merged by the future governments.

The five ad hoc allowances were equal to half of the existing pay scales.

However, the finance ministry said that the entire special pays, special allowances or the allowances admissible as a percentage of pay, including house rent allowance and the allowances, special allowance equal to one-month basic pay granted to the federal government employees irrespective of the posting place “shall stand frozen at the level of his admissibility as on 30-06-2022”.

The finance ministry has given an option to all the employees whether they want to get salary at the 2017 pay scale or the new 2022 scale. Those who would not give any option will get salary on the basis of the new pay scales.

After the merger and on the basis of new scales, the maximum basic pay, excluding allowances, of a Grade 22 employee will be Rs244,130 –an increase of 48% on the old base. Similarly, the Grade 21’s basic salary will be Rs217,670 – also up by 48%. Grade 20 employee’s basic salary will be Rs196,130 – up by 53%.

In addition to the basic pay, the Grade 20 to 22 civil servants also get a car monetisation allowance of Rs68,000 to Rs97,000 per month in addition to some other allowances and free home facility.