The Pay Commission formed in 2015 under the leadership of Dr Farashuddin Ahmed had recommended that no new pay commission should be formed. Instead, government employees were to receive a 5% annual increment every 1 July.
If the inflation rate in any year was higher, the increment would also be adjusted in line with inflation.
A small wing comprising three or four officials under the Finance Division was supposed to be set up to calculate inflation and determine the appropriate rate of annual increments. But that never happened. I do not remember now why it was not done.
Even after salaries were doubled in 2015, corruption did not decline. Rather, it increased.
But it would not be right to compare corruption with whether or not a new pay structure is introduced. There are many honest officials in the administration. Those who do not engage in corruption should not have to remain on the same pay structure for 11 years.
At the same time, there are some positions where, if the salary offered is specified, many people would be willing to take up those jobs.
Government employees have been receiving salaries under the same pay scale for 11 years. Although they receive annual increments, those increases have not kept pace with inflation and the rising cost of living over this period.
A proposal has now been made to increase the salaries of peons by 100% and set their pay at Tk20,000. How can a family live in this country on less than that?
But the question is: where will the money for implementing a new pay structure come from?
The additional spending will ultimately put pressure on ordinary people. Government employees also pay taxes and VAT, so the burden will fall on them as well.
When the eighth pay structure was implemented in 2015, we conducted a study and found that the new pay structure did not cause a significant increase in inflation.
This was because the amount of money spent as a result of the new pay structure was not very large compared with the amount of money already circulating in the market.
But Bangladesh’s financial problems have now become two-pronged. Whichever way you go, there is a problem. The revenue collection situation is not favourable. The target set in the budget is unlikely to be achieved.
As a result, a budget deficit is inevitable. Although funds have been allocated in the current fiscal year’s budget to implement the new pay structure, there would be a budget deficit even without this additional expenditure.
Bangladesh’s budget is equivalent to 15% of GDP, but actual spending stands at 12% to 14% of GDP. As a developing country, the budget should be around 25% of GDP. But this is not possible because of weak revenue collection.
Therefore, the government needs to focus on increasing revenue collection both to keep the economy dynamic and to implement the new pay structure.
Mahbub Ahmed is a former finance secretary
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