The Federal Budget 2025–26 has brought some relief for the salaried class in Pakistan. Announced by Finance Minister Muhammad Aurangzeb, the budget includes a 10% salary increase for all government employees, covering grades 1 to 22. This decision comes in response to rising inflation and cost-of-living pressures faced by the public sector workforce.
The pay raise was approved during a federal cabinet meeting chaired by Prime Minister Shehbaz Sharif. It is part of a wider set of fiscal measures aimed at easing the financial burden on employees and retirees.
In addition to the salary increase, the pensions of retired government employees will be increased by 7%. The government has also approved a 30% hardship allowance for employees working in difficult or remote areas. This is meant to provide relief to those serving in challenging environments, such as border regions or underdeveloped districts.
Another key highlight is the special relief allowance for officers and soldiers of the armed forces, which will be financed through the defense budget for FY 2025–26.
Furthermore, the special conveyance allowance for differently-abled employees has been increased from Rs4,000 to Rs6,000 per month, showing a commitment to inclusivity and social welfare.
The Finance Bill 2025–26 was also approved, including tax reform proposals. While full details of the taxation measures are yet to be shared, officials say the bill aims to provide more relief to the salaried class.
Before finalizing the budget, the government considered raising salaries by 6%, 10%, or 15%. After evaluation, 10% was chosen as a balanced and sustainable option.
These decisions come amid growing public demand for income support due to rising prices. The new budget now awaits parliamentary approval, after which the measures will be implemented at the start of the new fiscal year.
Budget 2025–26 (Government Employees)
| Measure | Details |
|---|---|
| Salary Increase | 10% for Grades 1–22 |
| Pension Increase | 7% for retired government employees |
| Hardship Allowance | 30% for eligible employees in remote/difficult areas |
| Special Relief for Armed Forces | Extra allowance funded from defense budget |
| Conveyance Allowance for Special Employees | Increased from Rs4,000 to Rs6,000/month |
| Finance Bill 2025–26 | Approved – includes tax reforms and relief steps |
| Budget Final Decision | 10% raise chosen (after considering 6%, 10%, 15%) |
| Budget Status | Awaiting parliamentary approval |
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