MoF all set to file summary to Cabinet

MUSHTAQ GHUMMAN

ISLAMABAD: Ministry of Finance (MoF) is all set to submit a summary to the Federal Cabinet in its forthcoming meeting for an increase of 25 per cent in basic salaries of employees from BS-1 to BS-19 as Disparity Reduction Allowance (DRA), sources close to Finance Minister told Business Recorder.

This allowance was agreed between the employees of Federal Secretariat and a committee of three Federal Ministers, after massive protest demonstrations and use of "expired" teargas shells and the death of one policeman.

According to the Finance Ministry, a structure of unified pay scales was introduced in 1972 for all government servants. However, since 2009, disparities in salaries have occurred because employees of various government establishments were allowed 100 percent to 300 percent of the basic pay as allowance, in addition to the usual pay of the scale.

The Government did not allow any increase in salaries of government servants in the budget for FY 2020-21. At the same time the tax slabs for the salaried class were revised. This tax revision, coupled with inflation, has had an adverse impact on government servants take-home salaries which actually reduced even in nominal terms.

The matter was reviewed in the meeting of the Secretaries' Committee wherein it was concluded that the salary structure of the Federal Secretariat has become a major impediment to attracting competent officers to work in Federal Ministries. Officers now prefer working for provincial governments, where salaries have been raised significantly. The Secretaries' Committee was of the opinion that the present pay structure is not tenable and salaries of the Federal Secretariat require an upward revision in order to motivate and retain officers in the Federal Secretariat.

Furthermore, there have been protracted and widespread protests by clerical staff against the disparity in salaries. Civilian employees who have never been granted an allowance equal to 100 percent of the basic pay work out to be 296,470, out of a total 623,215 employees, or almost 48 percent. The Federal Cabinet had also noted this disparity during the review of the ‘budget strategy’ for FY 2020-21 and directed harmonization of salaries. A ‘Pay and Pension Commission 2021’ has been constituted which is formulating recommendations for adoption effective from July 1, 2021.

However, in view of the immediate relief required for those government servants who are “disadvantaged” vis-a-vis those who are receiving higher remuneration it was, therefore, proposed that till such time that a new salary structure is adopted on the recommendations of the Pay and Pension Commission, a 'Disparity Reduction Allowance' of 25 percent of the basic pay of BS-2017 may be allowed from March 1, 2021 to those civil employees in BS-1 to BS-19 of the Federal Government (including employees of the Federal Secretariat and attached departments) who have never been allowed additional salary equal to or more than 100 percent of the basic pay (whether frozen or otherwise) or performance allowance.

The 'Disparity Reduction Allowance' will be granted on standard conditions. It will not be admissible to employees of the organizations; and will be frozen at the level drawn on March 1, 2021. The financial impact of this allowance would be approximately Rs. 21 billion per annum. Any issues arising out of the implementation of disparity reduction allowance will be resolved by a committee to be notified by the Finance Division. Moreover, Finance Division may recommend to provincial governments to consider adopting the proposed disparity allowance for their employees, to be funded from provinces' own resources.

Ministry of Finance has further submitted for information of the Cabinet that posts in BS-1 to BS-16 will be upgraded from March 1, 2021, and ‘timescale’ promotions will be considered for adoption in the budget for FY 2021-22, on the analogy of the government of Khyber Pakhtunkhwa. Furthermore, various ad hoc relief allowances will be considered for merger in the basic pay scales from July 1, 2021.