ISLAMABAD:

The federal cabinet has approved another special allowance for top bureaucracy – the second in four years – and sanctioned Rs1.8 billion budget in the middle of a further extension in austerity measures and a 7% raise for all government employees.

The decision was taken during the special cabinet meeting that approved the budget on June 12, but the cabinet division released the details as late as July 17.

In the same meeting, the Prime Minister Shehbaz Sharif-led cabinet approved only a 7% increase in salaries for all government employees, including these possibly couple of hundred bureaucrats who will enjoy two special allowances, and also extended the austerity measures to the current fiscal year 2026-27.

The well-connected bureaucrats' salaries and perks have been on the rise, but the rest of the public sector employees are not compensated in the middle of biting inflation. Without first strengthening the regulator, the people are also exposed to imported inflation and now daily fluctuation in fuel prices – a new phenomenon.

The name of the new allowance is "All Pakistan Services (APS) Provincial Governments' Cadre Posts' Parity Allowance". It is the second special allowance that PM Sharif approved after he gave a 150% executive allowance to the bureaucrats in June 2022.

The cabinet also approved a Rs1.8 billion allocation to pay the allowance with effect from July 1 – a sum that suggests the allowance would be at least equal to 100% of the basic pay.

The secretary establishment division and secretary cabinet did not respond to questions about the purpose and rate of the new allowance. They also did not respond to questions about whether any need assessment study was conducted, particularly in light of the last major 150% increase in the salaries of the bureaucrats through the executive allowance.

The sources said the logic for giving both allowances was the same: that there were huge perks and privileges that bureaucrats were enjoying in the provinces, and they did not want to serve in the federal government. They said there was also discrimination in the pay structures of the federal government, judiciary, and special organisations like the National Accountability Bureau (NAB) and the Federal Board of Revenue (FBR).

However, instead of bringing pay structure reforms, the government of PM Sharif is creating more distortions that can be exploited by other service groups to claim the same benefits.

Under Article 240 of the constitution, All-Pakistan Services (APS) are specialised civil services whose members serve in posts and capacities common to both the federal government and the provincial governments. The Pakistan Administrative Service and Police Service of Pakistan are considered all Pakistan Services.

A recent World Bank report has highlighted how the provinces misused the additional money under the National Finance Commission award by increasing salaries and pensions multiple times.

PM Sharif-led cabinet further directed that the establishment division, in consultation with the cabinet and finance divisions, would submit a case to the prime minister, seeking his approval regarding the quantum and structure of the allowance, including eligibility criteria and other parameters, to ensure fairness and equity amongst the officers of the All-Pakistan Services who are posted in Islamabad.

The cabinet has also approved to calculate the 150% executive allowance on the basis of the running basic pay as on June 30, 2026, by delinking it from 2017 pay levels, providing another significant relief to the bureaucrats serving in grade 17 to 22.

The government had granted the executive allowance to all officers posted by the Establishment Division against sanctioned posts of section officers, deputy secretaries, joint secretaries, senior joint secretaries, additional secretaries, additional secretaries in-charge, special secretaries and secretaries in the federal secretariat, the Prime Minister's Office and the President's Secretariat.

Later, the executive allowance was extended to other service groups who protested against the discrimination – an episode that might be repeated again in the case of the All-Pakistan Service Allowance.

Austerity too continues

In the same cabinet meeting, the premier also approved extending the austerity measures taken during the past few years. However, the cabinet also approved a back-door exemption to buy goods in relaxation of its own decision.

The cabinet authorised the Austerity Committee constituted by the Finance Division from time to time to grant relaxation from these austerity measures, where there was sufficient justification, on a case-to-case basis, according to the decision.

Despite austerity in place, the austerity committee has been granting exemptions to buy cars for bureaucrats and ministers, and allowing purchases of furniture and renovation of offices.

The cabinet also approved the continuation in FY2026-27 of a complete ban on purchase of all new durables, a complete ban on purchase of all vehicles, and single dish in the case of meals and tea and biscuits on other occasions to be served at government events and meetings. But the austerity committee has been relaxing these measures from time to time.

The cabinet has also extended the ban on creation of new posts, including contingent paid and temporary posts; continuation of contingent paid and temporary posts beyond one year; treatment abroad at government expense; and all non-obligatory visits abroad where government funding is involved.

However, during the last couple of months, the cabinet has approved the creation of new positions in the Ministry of Interior.

The cabinet decided that these austerity measures will also be applicable to state-owned entities, and instructions have been given under the State-Owned Enterprises Governance and Operations Act, 2023, stated the cabinet division.