ISLAMABAD: The government has made a block allocation of Rs160 billion for providing 10 percent raise in salaries and pensions to the public sector employees during the current fiscal year 2021-22.
Now it seems that the monster of pension liability is all set to cross the Rs500 billion mark at the federal level and is estimated to be standing at Rs520 billion for the current fiscal year. Out of the allocation of Rs500 to Rs520 billion, almost 80 percent of the pension amount is consumed by military personnel while 20 percent is meant for the civilian side during the current fiscal year.
Despite tall claims and promises, the Ministry of Finance once again failed to come up with any sort of much-awaited reforms on the pension front. The pension liability of the federal and four provincial governments will be touching a whopping amount of Rs1,500 billion on annual basis during the current fiscal year.
At the moment, Sindh’s 62 percent resources are utilized for payment of salaries and pension bills while KP’s 57.5 percent are spent on fulfillment of this head.
In the next five to seven years, the whole resources of provinces are going to be eaten away by salary and pension bills, so there is a dire need to kick-start reforms to bring down the pace of increase in pay and pension obligations. Otherwise, another financial instability will be knocking at our doors.
According to the budget documents for 2021-22, the government made an allocation of Rs479 billion for running of civil government in the current fiscal year’s budget 2021-22 against Rs476.5 billion allocated for the last financial year. For pension payments, the government allocated Rs480 billion for fiscal year 2021-22 against Rs470 billion for the previous fiscal year.
With this allocation, the government would not be able to meet expenditure requirements for granting a 10 percent raise in salaries and pension bills. This scribe made efforts to talk to Additional Finance Secretary Budget Tanveer Butt and left messages but did not reply back.
Another senior official of the Finance Division told The News that the government made separate block allocation of Rs160 billion for granting raise in salaries and pensions of the public sector employees for the current fiscal year. The parliament also approved granting 25 percent disparity allowance to Grade 20 to 22 employees, which was provided to grade 1 to 19 employees in the last financial year after severe protest undertaken by public sector employees that had literally choked the federal capital during protest timings.
The official said that the running of the government related allocation was expected to go up to Rs100 to Rs120 billion after incorporating 25 percent disparity allowance and then 10 percent adhoc relief allowance, so in totality it comes into effect at the rate of 35 percent.
Keeping in view the rising inflationary pressures in the last three years, reputed economists, especially former finance minister Dr Hafeez A Pasha, have come up with startling disclosure that the real wages declined by almost 9 percent in the last financial year 2020-21. The government had also jacked up the minimum wages from Rs17,500 to Rs20,000 on eve of the budget for 2021-22.
“We will be able to manage expenses on the front of raise in salaries and pensions within the allocated funding amount of Rs160 billion for the current fiscal year,” a top official of the Finance Division said and conceded that the pension reforms could not be initiated because the government was waiting for the final report of the Pay and Pension Commission, which is working under chairperson Nargis Sethi and is expected to finalize its report within the current fiscal year.
