Hafiz Mudassir Rizwan
In an unexpected display of unity, both government and opposition parliamentarians have recently come together to push for a substantial pay raise, demanding a salary equal to that of a federal secretary. This request was formally approved by the Finance Committee, as outlined in a private member’s bill passed on January 20, 2025. While salary adjustments for parliamentarians have occurred in the past through amendments to the Members of Parliament Salaries and Allowances Act, the current proposal is attracting significant attention due to its timing and the scale of the proposed increase.
The parliamentarians reportedly sought a salary raise to one million rupees per month, a figure that Speaker Ayaz Sadiq has reportedly opposed. Instead, the decision, which is now set to take effect, would see their salaries increase from the current 188,000 rupees per month (inclusive of 38,000 rupees in allowances) to 519,000 rupees per month, a rise of 176%. Ostensibly, this pay hike is being justified as a response to Pakistan’s high inflation rate, but the broader implications of this decision deserve a closer examination.
While the justification for this increase is based on rising inflation, three critical factors should be taken into account before such a decision can be deemed reasonable. The first factor is the ongoing fragility of Pakistan’s economy. The country’s economic situation is precarious, with mounting concerns about its ability to meet the revenue targets set by the Federal Board of Revenue (FBR). For the period of July-December 2024, the FBR faced a shortfall of 386 billion rupees, falling well short of the budgeted target of 6009 billion rupees. As a result, Pakistan may soon be forced to implement its contingency plan (also known as the minibudget) as agreed with the International Monetary Fund (IMF) under the ongoing Extended Fund Facility (EFF).
Compounding the economic stress is Pakistan’s reliance on indirect taxes, which account for a staggering 75 to 80% of the nation’s tax revenue. These indirect taxes, which disproportionately affect the poor, are set to rise as part of the IMF’s contingency plan. With poverty already affecting around 41% of Pakistan’s population—an alarmingly high figure when compared to Sub-Saharan Africa—these tax policies are likely to exacerbate the financial hardship faced by millions of citizens.
Another issue that demands attention is the broader context of the government’s fiscal policy. This year, the government has approved a 20 to 25% salary increase for both civilian and defense personnel. While such increases are often framed as necessary to counteract inflationary pressures, they come at a significant cost. This salary increase has added 21% to the government’s current expenditure, a policy that many argue is highly inflationary. Moreover, this raise has primarily benefited the 7% of the workforce employed in the public sector, while the remaining 93%—working primarily in the private sector—has not received pay raises in the past four to five years due to economic slowdown and natural disasters such as floods.
This salary increase has been financed by taxpayers, many of whom are already burdened with rising utility tariffs as part of Pakistan’s commitments to the IMF. Consequently, the general public’s acceptance of salary hikes for parliamentarians and bureaucrats has diminished, as the gap between public sector wage increases and private sector stagnation widens.
The issue of government expenditure is further complicated by Pakistan’s ongoing rightsizing efforts. There has been significant discussion regarding the filling of vacant posts within the public sector, particularly in the federal government. Current estimates suggest that there are approximately 150,000 unfilled positions, with the sanctioned strength of government employees standing at 1.2 million, but only 947,610 employees currently working. However, it is important to note that many of these vacancies—around 21%—date back to 2022-2023 and primarily affect federal government positions. Notably, vacancies in corporations and autonomous bodies have not been addressed, meaning that the true scale of government employment may be larger than officially reported.
As Pakistan continues with its rightsizing and privatization efforts, there is hope that such measures will eventually yield positive results, including a reduction in the overall size of the public sector. However, one major concern is that the government’s approach to salary increases could undermine these efforts. If the government continues to approve substantial pay hikes for public sector employees at such a high rate, it may lead to an unsustainable increase in public sector wage bills, which could offset the anticipated savings from rightsizing initiatives.
Another important consideration is the role of parliamentarians in representing their constituents. Parliamentarians are paid a monthly stipend to cover the costs associated with attending parliamentary sessions and fulfilling their representative duties. However, the recent passage of controversial legislation, such as the Prevention of Electronic Crimes Act and the 26th Constitutional Amendment, suggests that political actions are often driven by the self-interest of politicians rather than the needs of the people they are supposed to represent. These legislative moves reflect a growing disconnect between the interests of the political elite and those of the general public, raising questions about the appropriateness of a substantial salary increase for parliamentarians at this time.
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While it is true that inflationary pressures warrant consideration of salary adjustments, it is equally important to recognize that the timing of such decisions is critical. The current state of Pakistan’s economy remains fragile, with looming fiscal and debt challenges. It would have been more prudent for parliamentarians to defer their demand for a pay raise until the economy is on a more stable footing—ideally indicated by improvements in international credit ratings, a sustainable fiscal deficit, and foreign exchange reserves that are derived from exports and remittances rather than debt.
In conclusion, while there is a legitimate case for adjusting parliamentarians’ salaries to account for inflation, the decision to approve such a significant increase at this particular juncture may not be in the best interests of the country. Given the broader economic context, including rising poverty levels and an overburdened taxpayer base, it would have been wise for political leaders to exercise greater restraint in their demand for pay hikes. Only when Pakistan’s economic outlook improves and public finances stabilize should such increases be seriously considered.
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