Dhaka: After more than a decade, the Government of Bangladesh is moving forward with plans to implement a new national pay scale for public sector employees. The initiative is now approaching the implementation stage. According to recommendations from the National Pay Commission, the Ninth National Pay Scale could be introduced gradually beginning in the 2026–27 fiscal year. Policy-level discussions on the matter are currently in their final stages within the Ministry of Finance and among top government policymakers.
Under the commission’s recommendations, the existing 20-grade structure would remain unchanged. However, the minimum basic salary is proposed to increase from Tk 8,250 to Tk 20,000, while the maximum basic salary would rise from Tk 78,000 to Tk 160,000. The recommendations also include enhanced pension benefits and increases in various allowances.
According to commission estimates, salaries for employees in the lower grades could increase by 100 to 147 percent, helping offset the impact of high inflation experienced in recent years.
Sources within the Ministry of Finance say the government is considering a three-phase implementation plan rather than introducing the entire pay scale at once:
Fiscal Year 2026–27: Implementation of 50 percent of the proposed basic salary increase.
Fiscal Year 2027–28: Implementation of the remaining 50 percent of the salary increase.
Fiscal Year 2028–29: Introduction of revised allowances and additional benefits.
This phased approach is intended to reduce the immediate financial burden on the government.
How Much Additional Funding Will Be Required?
This remains the most significant question.
Currently, the government spends approximately Tk 131,000 crore annually on nearly 1.4 million government employees and 900,000 pensioners. According to estimates by the Pay Commission, full implementation of the new pay scale could require an additional Tk 106,000 crore per year.
For the first phase alone, the government is reportedly considering allocating an additional Tk 35,000 crore in the budget for fiscal year 2026–27.
Where Will the Money Come From?
The question of financing the new pay scale has sparked widespread debate. Economists and government sources suggest that the government may rely on several funding sources:
1. Increased Revenue Collection
The National Board of Revenue (NBR) is expected to set ambitious targets for increasing tax and VAT collections in the coming fiscal year. Higher revenue generation could cover a substantial portion of the additional expenditure associated with the new pay scale.
2. Expenditure Rationalization
The government has already been pursuing policies aimed at restructuring development spending and reducing non-essential expenditures. Part of the required funding could come from these savings.
3. Borrowing
If necessary, the government may raise funds through the domestic banking system and national savings instruments. However, excessive borrowing could place additional pressure on inflation and interest rates.
4. Economic Growth and Foreign Assistance
Officials are hopeful that stronger economic activity, higher export earnings, and support from development partners will enhance the government’s overall fiscal capacity, helping finance the increased salary expenditures.
Economists note that higher incomes for government employees would likely boost consumer spending, increase market demand, and stimulate economic activity. At the same time, they caution that if production and government revenues do not grow at a similar pace, inflationary pressures could intensify.
The government’s biggest challenge will be balancing two competing priorities: increasing salaries to reflect the rising cost of living for public servants while maintaining control over budget deficits and inflation. Under current plans, the first phase of the new pay scale is expected to take effect in the 2026–27 fiscal year. However, its successful implementation will depend largely on the government’s ability to increase revenue collection and on the overall performance of the economy.
