Pay hike for government bankers and staff unlikely in budget

With only a week to go before the budget is announced, the government is yet to decide anything concrete on a pay hike for government employees.

Sources said the permanent pay commission had sent a proposal for non-financial benefits for government employees instead of monetary hikes.

Although the finance minister and his junior have hinted that the employees of the central bank and the four state-owned commercial banks may get a hike soon, the latest news is that both they and their ministry have backtracked from that position.

The logic behind this is a “lesson” learnt from October last year, when a 20% dearness allowance was declared for public servants, which is now said to have resulted in a surge in inflation, a senior ministry official said.

“Placing a dearness allowance in the coming fiscal year will be a wild idea because it may put pressure on the inflation situation,” he said.

Officials also said if the bankers were given a raise without giving any visible monetary hike to the government employees, it might spark unrest.

In October 2013, food inflation rose to 8.38% from 7.93% in September, according to the Bangladesh Bureau of Statistics.

In a recent television interview, State Minister for Finance MA Mannan said the government was going to announce a pay scale for the state banks next month.

Earlier this month, Prime Minister Sheikh Hasina directed Finance Minister AMA Muhith to give some hints about the new pay scale in his budget speech.

A draft of recommendations – which reportedly do not include either a dearness allowance or a hike for the bankers – from the permanent pay commission is likely to be incorporated in the June 5 budget speech for FY2014-15.

Former central bank governor Mohammad Farashuddin, now the chairman of the Pay Commission, said: “A pay hike for 13 lakh government staff will definitely have an impact on the inflation. Given the circumstances, we will consider recommending health insurance and buying textbooks for their children.”