Pakistan’s annual expenditure on government employees exceeds PKR 8 trillion: Report – Gudstory

The study, titled ‘Lifetime Cost of Public Servants’, was conducted by a five-member team of the state-run Pakistan Institute of Development Economics (PIDE) led by Nadimul Haq. It revealed that in Pakistan, the cost of paying these employees is approximately PKR 3 trillion, while the cost of pensions is approximately PKR 1.5 trillion. Additionally, project workers, personnel from government institutions and other organizations contribute approximately PKR 2.5 trillion to the total cost. According to Dawn, the army’s pay and salaries alone are around PKR 1 trillion.

The study revealed that when a new government employee is recruited, the public sector has to bear the costs associated with their salary, benefits and possible training. These financial outlays are funded through tax revenues. The addition of a new employee increases the overall personnel expenditure of the government, leading to a larger portion of the budget being allocated to salaries and benefits. This may have a direct impact on taxpayers, as the government may need to raise revenue through increased taxes or reallocation of funds from other sectors to cover these expenses.

The study further found that political motivations may cause governments to hire more people than necessary to reward supporters or create a sense of job security. Governments may not consider the long-term financial impacts of their recruitment decisions due to their short-term focus. Governments lacking economic expertise may make bad decisions about managing their workforce. And social expectations may cause governments to feel pressured to hire more people, even if they do not have the resources to do so.

When an employee is hired, he or she represents a stream of commitments from the budget for his or her lifetime and guaranteed lifetime employment and pension to surviving widows and unmarried daughters. We show here what the expected compensation amount is. We calculate the present value of the government commitment here. This is the value that the government should put into a bond to make it appointment budget neutral for the coming generation. Otherwise, costs will increase in future budgets.

The study reported that the BPS system continued with a socialist one-pay scale structure throughout the public sector, which favors the Pakistan Administrative Services (PAS) with non-monetary benefits and better appointments. Technically or professionally skilled individuals remained marginalized both in terms of grades and non-monetary benefits.

Despite efforts to introduce lateral entry into the BPS for technical or field specialists in the management pay scale and specialized pay scales, these efforts were hampered by a system that remained subordinate to PAS.

The study concluded that contrary to popular belief, civil servants did not suffer pay losses; There were many unaccounted elements that contributed significantly to his overall remuneration. According to Dawn report, benefits such as perks, allowances and government housing facilities were not reflected in the pay slips of civil servants.

Use of official vehicle for personal purposes by Grade 20-22 officers increased the total cost to more than 1.2 times the basic pay. Medical allowances and medical bill reimbursements further increased the cost.

The study revealed, “Perks and various allowances add significantly to the total cost of civil servants, and if monetized, the myth of low pay in the public sector would be broken. Judicial staff, along with secretariat and other Get more allowances. Employees of ministries are also getting 150 percent of their basic pay as allowances.”

The study concluded that it is important to achieve a balance between short-term gains and sustainable fiscal policies to tackle this challenge, Dawn reported.

with agency input

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Updated: October 16, 2023, 10:41 PM IST