Vantage | How is a 'broke' Pakistan handing out 45% salary hikes?

In Pakistan, a recent decision to grant a substantial salary hike to top bureaucrats in management positions has sparked controversy and raised questions about the country’s priorities. This move comes at a time when Pakistan’s economy is facing significant challenges including declining per capita income, rising inflation and a growing population living in poverty.

The bureaucrat salary hike The Pakistani government has announced a 45 per cent salary increase for top bureaucrats in management positions. These officials are not traditional civil servants. They come from the private sector and their recruitment was part of Islamabad’s strategy to leverage private sector talent to improve the country’s administration. The argument put forth to justify these substantial pay raises is that individuals from the private sector earn significantly more than their government counterparts. To attract top talent, the government must offer competitive salaries. Additionally, the last salary revision for these officials was in 2017 prompting the claim that it was long overdue. Economic context However, the decision to grant such a generous salary increase raises serious questions about the economic context in Pakistan. In 2023, Pakistan’s per capita income fell to $1,500, down from $1,700 in 2022 and $1,600 in 2021. Moreover, the country is grappling with high inflation with overall inflation standing at around 27 per cent and food prices increasing by more than 30 per cent. These economic indicators indicate that the majority of Pakistanis are facing financial challenges and struggling to make ends meet. The World Bank has sounded an alarm reporting that 40 per cent of Pakistan’s population now lives in poverty with over 12 million people slipping into poverty in 2023. Given these alarming figures, one has to question whether this was the right time to announce a salary hike of 45 per cent for a select group of individuals. What further complicates this issue is the role of the current caretaker Prime Minister Anwaar ul Haq Kakar. In Pakistan, the role of a caretaker government is clearly defined as one that should maintain the status quo and manage day-to-day affairs until a new government is elected. However, Kakar has gone beyond this mandate by delivering a speech at the UN General Assembly and attending the Belt and Road Summit in China. The timing of these actions is critical because Pakistan has just announced its general election dates with voting set for 11 February. This means the caretaker government will remain in power for around six months assuming charge in August. The International Monetary Fund is closely monitoring Pakistan’s financial situation and has agreed to provide a $3 billion bailout with certain conditions including increasing state revenue, raising taxes and cutting subsidies. The IMF’s assessment of Pakistan’s progress is vital as it will determine whether the funds will be released. Potential consequences If the IMF team is dissatisfied with the caretaker government’s actions and considers them a red flag, it could jeopardise the bailout. With the recent gas price hike that has affected 57 per cent of households, Pakistani citizens are already grappling with increased living costs. Ultimately, the decision’s implications on Pakistan’s economy and political landscape will become clearer in the coming months as the caretaker government’s tenure continues. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views. Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.