Pay Commission formed to recommend hike in public sector salaries

It has been tasked with recommending revisions to salaries within six months

The government has formed the National Pay Commission 2025 to review and recommend revisions to public sector salaries within six months.

A 23-member body headed by former finance secretary Zakir Ahmed Khan was announced in a circular issued by the Ministry of Finance on Sunday.

The commission will assess salaries, allowances, and other benefits of employees across government, semi-government, autonomous bodies, state-owned banks and financial institutions, government-aided universities, and state-run industrial enterprises.

Currently, nearly 1.5 million public servants are paid under the 2015 pay scale, which features 20 salary grades. Amid mounting living costs, demands for a new pay structure have intensified in recent months.

Calls for inflation-adjusted allowances surfaced after the interim government took charge in August last year, with expectations that the June budget for FY2026 would include such measures.

While no direct allowance hike was announced, Finance Advisor Salehuddin Ahmed unveiled a special benefit package for public employees, effective from Jul 1.

The new commission is expected to submit its first report within six months of holding its inaugural meeting.

Clear guidance has been sought from the commission to establish a method for adjusting public sector salaries and allowances in line with inflation, with financial calculations based on a household of six, including the employee’s parents.

Full-time members of the commission include former secretary Mohammad Ali Khan, former comptroller and auditor general Moslem Uddin, and former ambassador Fazlul Karim.

According to the official notification, an additional secretary or secretary from the Ministry of Public Administration will serve as the full-time member secretary of the Pay Commission.

Part-time members of the commission include: former auditor general Ahmed Ataul Hakeem, former government official Mohammad Zahid Hossain, former secretary Zishan Ara Arafunnessa, retired Maj Gen AIM Mostafa Reza Nur, Bangladesh Bank Deputy Governor Habibur Rahman, among others.

The commission may induct additional part-time members if necessary.

Terms of Reference:

(a) Determine a timely and appropriate salary structure for public employees

(b) Devise a structure for specialised positions

(c) Set a salary structure that accounts for income tax deductions applicable to officials under the national pay scale

(d) Recommend allowances beyond basic salary, such as housing, medical, transport, entertainment, deputation, dearness, festival, and recreation

(e) Determine an inflation-adjusted salary adjustment method

(f) Recommend appropriate and timely pension and retirement benefits

(g) Link salary structure with employee performance assessment

(h) Monetise direct service benefits (e.g., telephone, vehicles, mobile phones) and rationalise ration entitlements;

(i) Address anomalies in pay scales regarding promotions or increments.

While making recommendations, the commission will consider:

(a) The cost of living for a household of up to six members, including parents

(b) Education and healthcare expenses for up to two children

(c) National economic growth, government financial capacity, and resource needs for administration and security

(d) Income and expenditure status of relevant institutions

(e) Resource needs for poverty alleviation and pathways toward financial self-reliance

(f) Recruitment of talented and skilled officials in public administration

(g) Improvement of service quality through enhanced employee efficiency and motivation.