Revised Pay Structure Redesigns Annual Increment Rules

The government has initiated the process of implementing the proposed Ninth National Pay Scale for public sector employees from 1 July, although the official gazette is yet to be issued. In the meantime, early draft proposals suggest a significant overhaul of the annual increment system, moving away from the existing uniform structure towards a differentiated model based on pay grades.

Officials from the Ministry of Finance indicate that the gazette notification may take an additional two to three months. The ongoing review process is aimed at finalising a framework that balances fiscal sustainability with employee welfare, while also responding to long-standing concerns over inflation and cost-of-living pressures.

Under the preliminary draft, annual increments will no longer follow a single uniform rate across all grades. Instead, employees in grades 6 to 20 are proposed to receive a 5 per cent increment on their basic salary. For grade 5, the rate is set at 4 per cent, while grades 3 and 4 are proposed at 3.5 per cent. For grade 2, the increment is lower at 2.75 per cent. The increment rate for grade 1 will be determined separately. At present, all grades generally receive an average annual increment of around 5 per cent.

Government data shows that the proposed restructuring follows an extensive consultation process. Opinions were gathered from 167,500 government employees, 61,500 citizens, and heads of 3,513 institutions. Only 5.6 per cent of respondents supported maintaining the existing increment system. By contrast, 50.43 per cent favoured linking increments to inflation adjustments, while 31.54 per cent supported aligning salary growth with living costs. A significant 79.5 per cent also expressed the view that employees in grades 11 to 20 should receive comparatively higher annual increases.

Alongside the increment revisions, adjustments to allowances have also been proposed. Although the National Pay Commission recommended raising medical allowances to 5,000 taka, the revised proposal sets it at 3,000 taka. Similarly, the education allowance for children has been adjusted from the proposed 2,000 taka to 1,500 taka.

An official from the Finance Division noted that while the new pay structure will substantially increase basic salaries, some allowances have been moderated compared to the commission’s recommendations. However, all allowances will still be higher than current levels. The implementation strategy suggests that the revised basic pay will be introduced first, while revised allowances will be phased in gradually from the 2027–28 fiscal year onwards.

Government analysis indicates that the impact on lower-grade employees will be particularly significant. At present, a 20th-grade employee receives a basic salary of 8,250 taka, with total monthly earnings, including allowances, amounting to approximately 16,950 taka. Under the proposed structure, if the basic salary is raised to 20,000 taka, total monthly income could rise to around 41,908 taka.

Similar upward adjustments are expected across all grades from 19th to 1st. However, to maintain balance within the pay structure, the rate of increase in allowances for higher grades is expected to be comparatively restrained. This is partly because several allowances, including transport, tiffin, washing and risk allowances, are primarily applicable to employees in grades 10 or 11 through to grade 20.

The revised framework is intended to create a more differentiated and responsive salary structure, reflecting both hierarchical responsibilities and broader economic conditions. As discussions continue, final approval of the pay scale remains pending the issuance of the official gazette.