Tanzina Fardoush
Oniket Research Group
Beyond Higher Salaries, Bangladesh Needs a Sustainable Public Pay Structure
The Ninth National Pay Scale 2026 is undoubtedly a major economic and administrative decision for Bangladesh’s government employees. The existing 20 grade structure has been retained, with the minimum basic salary set at Tk 20,000 and the maximum basic salary at Tk 156,000. Depending on the grade, basic salaries will increase by between 100 and 142 percent. According to reports published in the Ministry of Finance’s information repository, the government’s additional annual expenditure for implementing the new structure is estimated at Tk 105,580 crore. The new pay structure is scheduled to come into effect on 1 July 2026.
On paper, the figures look impressive. But the success of a state’s pay system cannot be measured simply by asking how much salaries have increased in percentage terms. Several other questions need to be considered. Will the new salary ensure a minimum standard of living for a government employee and their family? How does the salary increase compare with inflation, housing costs, healthcare, education, transport and the cost of securing a child’s future? Will the new structure offer competitive remuneration capable of retaining talented young doctors, engineers, teachers, researchers, administrators and technology professionals in government service? Will an employee’s purchasing power remain protected after retirement? Most importantly, can the state build a pay system that does not require employees to wait for another massive pay commission every decade?
The answers to these questions will ultimately determine the real success of the Ninth Pay Scale.
A Pay Scale Is More Than Basic Salary
In Bangladesh, discussions about salaries often remain focused on the basic pay. However, a government employee’s financial position is determined by the overall compensation structure. Basic salary, house rent, medical allowance, transport facilities, festival allowance, Pahela Baishakh allowance, education related benefits, risk or responsibility-based allowances, pension and post-retirement benefits together form the employee’s actual compensation package.
Therefore, evaluating the new pay scale based only on two figures, a minimum basic salary of Tk 20,000 and a maximum basic salary of Tk 156,000, is not enough. The more important question is how much a Grade 20 employee takes home at the end of the month and how much is required to meet the minimum needs of their family.
Similarly, for a Grade 1 officer, the question should be how competitive the total compensation is in relation to the officer’s responsibilities, expertise, accountability and decision-making authority, both in the domestic and international labour markets.
In other words, future reforms to the pay structure must clearly distinguish between Basic Pay and Total Compensation.
Why a Ten-Year Gap Is a Structural Problem
After the publication of the 2015 National Pay Scale, government employees had to wait almost a decade for a new structure. The Ministry of Finance’s official website contains various documents and orders related to the 2015 National Pay Scale. This raises a fundamental question about Bangladesh’s salary policy: should a pay commission be an occasional event, or should it become a permanent economic institution?
International experience shows that public pay management requires regular reviews that consider labour market comparisons, employment structures and the government’s fiscal capacity. Research by the IMF has also viewed public sector wage and employment management not simply as a matter of raising salaries, but as part of a broader structural policy linked to fiscal planning, public service delivery and competitive remuneration.
Bangladesh therefore needs a Permanent Pay Review Mechanism instead of relying on a major pay commission once every ten years. Under such a mechanism, salaries could be adjusted regularly based on inflation, the cost of living, labour market wages and the government’s revenue capacity. A comprehensive review of the overall pay structure could then be conducted every three to five years.
Such a system would reduce the need for sudden, large-scale salary increases and help ease the pressure of a major financial adjustment on the state.
Is a 5 Percent Annual Increment in Line with Reality?
The concept of an annual increment is not new in Bangladesh’s public pay structure. The 2015 pay structure also included fixed annual salary increases depending on the grade. But there is a fundamental mismatch that needs attention.
If an employee’s salary increases by 5 percent a year while the cost of living rises at a higher rate, the employee’s purchasing power may decline despite receiving a higher salary on paper.
This is why annual increments and Cost of Living Adjustment, or COLA, need to be treated as two separate mechanisms.
An increment can reflect experience, skills and career progression. COLA, on the other hand, is intended to compensate for the impact of inflation. If the two are treated as the same mechanism, both performance-based recognition and inflation compensation can become weaker.
A two-tier salary adjustment system could therefore be considered in future reforms.
First, a fixed annual increment based on experience and career progression.
Second, an automatic cost of living adjustment based on inflation.
Dhaka’s Salary Cannot Measure the Cost of Living Across Bangladesh
Another major weakness of Bangladesh’s current pay structure is that employees in the same grade receive the same basic salary whether they work in Dhaka or in a remote district, even though their living costs can be very different.
The situation can also be reversed in some cases. While housing costs may be lower in certain districts or towns, expenses related to transportation, education, healthcare or specific goods and services may be comparatively higher.
Future pay policies could therefore consider the concept of a Location Based Allowance or regional cost of living allowance. Separate cost indices could be developed for Dhaka, Chattogram, Sylhet, other major cities and remote or hard to reach areas.
In this regard, the Bangladesh Bureau of Statistics’ Consumer Price Index, Wage Rate Index and House Rent Index could provide important foundations. BBS currently publishes data on CPI, WRI and the House Rent Index and has also rebased these indices using 2021 to 2022 as the base year.
The key question for future salary policy, therefore, should not be limited to how much an employee earns. Where does the employee work, what is the local cost of living, and how much income is required to maintain a reasonable standard of living in that location?
To Be Continued
In the second part of this article, we will examine the consistency and alignment between pay scale reform and pension reform, and why both need to be considered as part of a sustainable public compensation system.
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