The government is also considering linking the proposed hike in salaries and pensions of public sector employees with exorbitant inflationary pressure, which was projected to remain in the range of 20 percent for the outgoing fiscal year.
"So, the employees' salaries should be increased by at least 20 percent," said sources, but Finance Ministry high-ups stated that it would depend upon the fiscal space how much the government could absorb the burden owing to the rising bill of salaries and pensions.
There are about 3.5 million public sector employees at the federal and provincial governments. A major chunk of employees belongs to the provinces, hovering around over 2 million, in the fold of the public sector. As food inflation is on the higher side, the salaried persons and pensioners are the major victims of price hike, and they are eyeing the next budget for another raise in their salaries and pensions.
The government on Tuesday informed the provinces that it would transfer financial resources, up to Rs 590 billion, to them under the Federal Divisible Pool (FDP) in the 2009-10 budget, it is learnt. A crucial meeting was held between the Centre and four provinces here at Finance Ministry on Monday in which the provinces were informed that their share could go up in the range of Rs 590 billion in the next budget. The federating units asked the government to provide additional funds, outside the Federal Divisible Pool (FDP), in order to help them for preparing the next budget.
During the meeting, it was also said that the government holds no plan to monetise perks and privileges of 3.5 million employees of the public sector in the 2009-10 budget while only ad hoc relief, in the range of 10 to 20 percent, will be granted to ease their financial woes, it is learnt. Ministry of Finance is working on three scenarios, by proposing the incumbent regime to increase salaries and pension in the range of 10-15 or 20 percent. The Finance Ministry will prepare a summary in this regard which will be tabled before the Cabinet to apprise the federal minister about the cost involved for approval of each of the three options. The government will announce the approved range of salary and pension increment in the budget on June 13.
With no plan to monetise the perks of public sector employees the luxuries such as provision of housing and cars for top bureaucrats at the cost of public expense will continue for another fiscal year 2009-10.
"The pay scales will not be revised, and only ad hoc relief will be provided to the employees to help mitigate the skyrocketing inflationary pressures," sources said. When contacted, an official in Finance Ministry on Monday said that the government has decided to take the Pay and Pension Commission, led by Dr Ishrat Hussain, into confidence before finalising the proposals to increase the salaries and pensions in the next budget.
The last Pay and Pension Committee, led by Moeen Afzal, had talked about monetising the perks and privileges for public sector employees in its detailed report, but it did not recommend to the government to move ahead, without wasting any time.
A member of the Pay and Pension Commission told this scribe on Monday that there were vested interests involved in it barring the government to move ahead in a serious manner. If the government decides to monetise the perks and privileges it will not be appropriate to provide Rs 10,000 to Rs 20,000 because no one can get a rented house in this range in major cities, he added.
"There are no chances to start monetisation of housing from the next budget," said sources. Provinces had already refused to monetise housing facility for over 2 million employees in the next budget for 2009-10 owing to severe financial constraints as they cannot afford a budgetary hit of Rs 120 billion on their own.
The federal government has estimated that it requires Rs 80 billion for monetisation of housing facility for 1.5 million public sector employees in one go. The monetisation means that the public sector servants will be deprived of their existing official accommodations and cash amount will be provided to enable them to set their priorities, keeping in view the requirements.
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