AS the Government has started the process for preparation of the budget for the next financial year (2025-26), Finance Minister Muhammad Aurangzeb has, once again, reiterated commitment of the Government to reduce the financial burden on the salaried class.
In an interaction with journalists in Lahore, he also expressed his resolve to support the construction industry while ensuring no gambling activities in real estate.
The Minister did not explain the specific relief he envisions for the salaried class, but fixed-income groups undoubtedly deserve the government’s attention.
Their struggles stem from a significant rise in the cost of living over the past two to three years, coupled with minimal increases in their pay and allowances during this period.
We have consistently highlighted in these columns how manufacturers, traders, shopkeepers and service providers quickly pass on inflationary pressures to consumers.
As a result, the real losers are fixed-income groups, whose resources remain stagnant unless the government acts to raise their emoluments.
There is also a perception and legitimately so that lack of proper pay structure breeds corruption and misuse of authorities.
The salaried class is under tremendous burden, which was highlighted by recent protests by thousands of the employees of the federal government in Islamabad, who demanded a meaningful increase in pay and allowances besides withdrawal of several measures that the government has taken in a bid to minimize its pension expenses in the name of reforms.
Pension scheme in the traditional sense of the word has almost been done away with both by the Federal and Provincial governments as new inductions are made either on contracts or against Contributory Provident Fund (CPF), which is nothing but peanuts as compared to the original pension benefits.
Regrettably, the Punjab Government has gone a step further than the Federal Government in depriving employees of a number of incentives and benefits and seems to be in no mood to listen to their grievances on this account.
There is hardly any possibility of the Government withdrawing pension reforms as these have been introduced at the instance of the International Monetary Fund (IMF) and save rising expenditures on this head.
However, the government must consider their genuine demands in respect of adequate increase in basic pay as well as allowances.
The policy of dragging feet on provision of incentives and facilities to the government servants must be avoided as highlighted by repeated postponement of the proposal by the Housing and Works Ministry for increasing the rental ceiling of the employees.
The government is supposed to revise the ceiling in line with the market conditions after every three years but this is deliberately being delayed, complicating accommodation problems of the employees.
It is not clear whether the Finance Minister meant an increase in salaries when he talked about provision of relief to the salaried class or he was merely indicating a revision in the tax burden on them.
This is because in 2024, the salaried class emerged as the third-largest contributor to income tax collection following closely behind banks and petroleum products, and still surpassing the country’s affluent textile exporters.
The Minister has repeatedly pledged to rationalize the tax base as it was unfair to impose more taxes on salaried class and the corporate sector, allowing other sectors like retailers to go scot free.
No doubt, a meaningful tax relief will also mean an increase in the take-home salary of the government employees but the ground realities demand an appropriate revision of the basic pay and allowances as well.
The government will be saving billions as a result of the ongoing process of right-sizing the ministries, divisions and departments and it is logical that the remaining work force gets proper salary packages.
There is already resentment in the bureaucracy over manifold increase in salary and perks of the Members of the Parliament and judiciary and hopefully the government will not ignore its employees in the budget.
The Finance Minister might also look into frequent complaints about delay in the payment of salary and pensions in many institutions.
