Budget 2025–26: 10% Salary Increase for Government Employees; 30% Disparity Allowance Announced

Islamabad – In the federal budget for fiscal year 2025–26, the government has announced a 10% increase in salaries for all federal government employees from grades 1 to 22, along with a number of other financial relief measures despite ongoing economic challenges.
While presenting the budget, Finance Minister Muhammad Aurangzeb stated that the government aims to provide relief to the salaried class not only through tax reductions but also by improving compensation structures for public servants.
Key highlights include:
A 10% salary increase for all federal employees
A proposed 7% increase in pensions for retired government employees
An increase in the disabled employee allowance from Rs. 4,000 to Rs. 6,000 per month
A 30% Disparity Allowance for eligible federal government employees to address wage inequality across departments
In addition, the Finance Minister acknowledged the “valuable services” of the armed forces in protecting national borders. To honor their contribution, a Special Relief Allowance will be provided to them, which will be funded through the defense budget.
The announcement is being viewed as a modest but welcomed relief for public sector employees grappling with inflation and rising living costs.