5% special incentive for govt employees to continue

Similar to the last fiscal year, government employees, pensioners, and MPO teachers will receive a special incentive of 5% on their basic salary (with a minimum amount of Tk1000) in FY25, starting in July, in addition to their regular 5% yearly increment.

Last fiscal year, the government declared the annual special incentive facility for employees amidst escalating inflation.

While the incentive rates for different sectors, such as export, are set annually in the budget, the incentive for government employees announced in the FY24 budget will remain in effect until revoked by the government. 

Finance Division officials said such special allowances or incentives are typically terminated upon announcing a new pay scale. 

The government introduced the latest pay scale for government employees in 2015, nearly doubling their salaries. 

Under this scale, it is stipulated that employees receive a standard increment of 5% of their basic pay from every 1 July. 

However, if inflation exceeds 5%, the National Pay Commission advises adjusting the increment rate accordingly.

The National Pay Commission, led by former Bangladesh Bank governor Mohammed Farashuddin, proposed no further pay scale adjustments for government employees, despite calls from employees for a new pay scale ahead of the last general election, held on 7 January this year.

Following the FY24 budget announcement, taking into account high inflation and the election, Prime Minister Sheikh Hasina introduced special incentives for employees. 

As a result, the allocation for government employees' pay and allowances in the current fiscal year has experienced a sudden rise compared to previous years.

In the proposed budget for FY25, Tk83,500 core has been earmarked for government employees' salaries and allowances, marking a 7.76% or Tk6,000 crore increase compared to the revised allocation of the current fiscal year.

In addition to salaries and allowances, if funds are allocated for the perks and gratuities of officers and employees in state-owned corporations and autonomous institutions, the expenditure is projected to surpass Tk1 lakh crore in the upcoming fiscal year.

The main budget for FY24 allocated Tk80,463 crore for government employees' salaries and allowances, which was revised down to Tk77,489 crore.

In FY23, the actual expenditure on government employee salaries and allowances was Tk63,851 crore, compared to Tk62,856 crore in FY22, and Tk61,672 crore in FY21.

The government-established Minimum Wage Board determines wages for workers in different private sectors, including the garment industry, with an annual provision for a 5% increment in basic salaries.

However, with the introduction of special incentives in the current fiscal year, public sector employees are experiencing a more rapid increase in gross salary compared to their private sector counterparts.