A new salary structure covering around two million government employees, pensioners and other beneficiaries has moved closer to implementation, with the Cabinet now set to decide when it will take effect and whether the financial burden will be spread over multiple phases.
Prime Minister’s Adviser on Finance and Planning Rashed Al Mahmud Titumir said on Thursday that two major stages of the pay-scale process had already been completed and work was progressing towards a final Cabinet decision.
“The work is underway. The Cabinet will decide everything soon,” Titumir told reporters at the Secretariat.
The development comes as the government weighs the substantial fiscal implications of higher salaries and pensions against inflationary pressure that has eroded the purchasing power of public servants.
Titumir said around 1.4 million government officials and employees currently receive basic salaries.
Once pensioners and other related beneficiaries are included, the new structure could affect around two million people.
Under the process, the Pay Service Commission and the relevant pay committee for the armed forces have submitted their reports, which have been reviewed by the secretary-level committee with recommendations.
A Cabinet-formed committee is separately examining the salary structure for the judiciary.
Its first meeting has already been held, and recommendations will be prepared considering Bangladesh’s fiscal realities, the sensitivity of the issue and constitutional obligations.
The proposals will then go before the Cabinet, which will determine the effective date and whether the new pay structure will be implemented at once or in phases.
Titumir said inflation was being considered while designing the new structure, particularly its impact on government employees and pensioners.
However, he cautioned against assuming that higher government salaries would automatically reduce corruption, saying the objective was to establish an effective and reasonable compensation system.
He also argued that public and private-sector salaries should not be compared mechanically, as responsibilities and employment structures differ.
Borrowing not ruled out
Asked whether the government could borrow to finance the new pay structure, Titumir said borrowing itself should not be viewed negatively; the critical questions were its cost, purpose and economic return.
He said: “Can any business run without loans? Loan is not an issue. The issue is what percentage of the budget deficit is and what percentage of the gross domestic product is being collected in taxes.”
“We need to see at what interest, from whom, and for how long it is being taken,” he added.
The government, he said, would also have to consider spending on health, education and social protection, alongside whether fiscal policies were encouraging private investment and employment.
Titumir stressed increasing domestic resource mobilisation rather than simply raising tax rates, while criticising what he described as misleading economic narratives and information in the past.
Fuel buffer stock planned
Turning to the energy crisis, Titumir said the government expected some relief during winter and more visible improvement by next summer, while targeting broader energy security by 2029.
The government is considering establishing a mandatory fuel buffer stock to protect the country against future supply disruptions, drawing lessons from the current crisis.
“If the necessary stocks were kept in the past, the scale of the crisis would not have been so great,” he said.
Similar to strategic stocks of rice and wheat maintained for food security, he said Bangladesh needed minimum reserve standards for electricity-generation fuels to cushion the economy against international crises and sudden supply disruptions.
The government is also exploring alternative LNG sources and transportation routes amid supply complications, including discussions with Qatar and other potential suppliers.
Titumir said new offshore oil and gas exploration blocks were being prepared, with the government planning to move towards a tender process by November.
The government is also seeking to reduce financial liabilities in future power-sector agreements through a “No Power, No Pay” principle, under which producers would not receive payments when electricity is not generated.
The immediate focus, however, remains the new pay structure.
With the technical stages advancing, the politically and fiscally consequential decisions -- when it begins, how quickly it is rolled out and how the government pays for it -- now rest with the Cabinet.