Govt Employees Get a Big Salary Boost in Pakistan | 2025–26 Pay Increase Details
The Government of Pakistan has approved a major salary increase for federal employees in the fiscal year 2025–26, offering much-needed financial relief amid record inflation and rising living costs. According to official sources from the Finance Division and Ministry of Housing and Works, the new pay package includes a substantial boost in basic salaries and housing allowances for public servants across all grades, marking one of the largest public-sector pay revisions in recent years.
Key Highlights of the Salary Increase
According to official documents and government sources, the following adjustments have been approved for federal government employees:
- 85% increase in rental ceiling allowances for employees in major stations, including Islamabad, Rawalpindi, Karachi, Lahore, Quetta, and Peshawar.
- Basic pay scale adjustments under review, with a 10%–15% rise proposed for BS-1 to BS-22 employees.
- Implementation through revised notifications expected from November 2025, after the Federal Cabinet’s final approval.
- Additional funds allocated to ensure timely adjustment of allowances and arrears from July 2025 onward.
This marks the largest revision since 2021, when the rental ceiling was last increased by 45%.
Why the Salary Boost Was Needed
The government’s decision comes amid soaring inflation and increasing housing rents that have severely impacted employees’ purchasing power.
Federal workers — especially those stationed in the capital and provincial headquarters — had been demanding adjustments to housing and utility allowances to reflect market realities.
WhatsApp ChannelOfficials from the Finance Ministry noted that the raise aims to “restore real income levels of public servants and maintain service morale,” particularly for lower-grade employees struggling with essential expenses such as rent, fuel, and groceries.
New Allowances and Coverage
The new package will benefit employees from Basic Scale 1 to 22, including:
- Administrative officers and support staff in federal ministries.
- Education and health sector employees under federal payroll.
- Armed forces and civil defence personnel, who will receive parallel adjustments.
- Employees posted outside headquarters, through corresponding housing and transfer allowances.
In addition, the House Rent Ceiling has been increased to bring government-paid housing closer to market rent levels. This change will apply to more than 200,000 employees nationwide, with expected monthly relief ranging from Rs 15,000 to Rs 80,000, depending on the grade and posting location.
Implementation Timeline
- Effective Date: July 1, 2025 (for arrears)
- Revised Notifications: To be issued after Federal Cabinet endorsement
- Payment Cycle: Adjusted allowances to reflect in November payroll
- Review Mechanism: Annual assessment to align with market rent and inflation trends
The Ministry of Finance has already directed relevant divisions to allocate budgetary adjustments within the 2025–26 fiscal framework.
Employee Reactions
The announcement sparked relief among public-sector employees, with many describing it as “a long-overdue correction.”
Union representatives praised the decision, saying it would help restore purchasing power and encourage productivity. However, they urged the government to continue periodic adjustments to prevent erosion of benefits due to inflation.
A representative from the All Government Employees Grand Alliance (AGEGA) stated:
“This is a positive step, but real wages must continue to track inflation. We hope the government keeps this momentum.”
Economic and Administrative Impact
Economists view the decision as a short-term relief that may boost morale and consumer spending among middle-income groups. However, it could also increase fiscal pressure on the federal budget if not offset by revenue growth.
The Finance Division has emphasized that the hike is part of a targeted pay rationalization policy rather than a blanket increase, ensuring fiscal discipline while improving living standards.
Conclusion
The government’s decision to grant a big salary boost for 2025–26 demonstrates a renewed commitment to public-sector welfare and economic balance.
If implemented smoothly, the move will bring meaningful relief to hundreds of thousands of civil servants and strengthen trust between the workforce and the administration.
This policy marks not just an increase in pay — but a reinvestment in Pakistan’s public service system and a much-needed morale lift during challenging economic times.
