The government has announced a salary pension hike of 7% for federal employees and retired staff in the Budget 2026-27, offering limited relief amid rising inflation pressures in the country.
Federal Finance Minister Muhammad Aurangzeb presented the budget in the National Assembly and confirmed that both government salaries and pensions will increase by 7% from the next financial year. The move aims to support public sector employees facing higher living costs.
Along with the salary and pension adjustment, the government also announced a 10% increase in the minimum wage for labourers. The minimum wage has been raised to Rs 40,000 per month, marking another step to support low-income workers.
Relief for employees amid economic pressure
Officials said the salary pension hike is part of a broader effort to balance fiscal constraints with public demand for relief. However, the increase is lower compared to inflation expectations, which continue to affect household budgets across Pakistan.
Economists believe the adjustment will provide short-term relief but may not fully offset rising utility bills, food prices, and transport costs. Public sector unions have repeatedly called for higher revisions, arguing that salaries have not kept pace with inflation.
The finance minister, while presenting the budget, highlighted external economic challenges, including global oil price fluctuations and regional geopolitical tensions. He stated that the government has tried to avoid passing the full burden of these shocks onto consumers.
Economic outlook
The budget 2026-27 focuses on maintaining financial stability while offering targeted relief to the salaried classes. Analysts say the salary pension hike signals cautious fiscal management rather than aggressive spending.
More details on taxation and development spending are expected to be debated in parliament in the coming days.
