Cabinet clears 142% pay hike, rollout in phases
The Cabinet has approved Bangladesh’s National Pay Scale 2026 after months of review, but the final package differs from the proposals that emerged from either the interim government’s Pay Commission or the BNP government’s secretaries’ committee. It restores the larger raises recommended for lower-paid employees, trims the proposed top salary, and spreads the full increase over two years, with revised allowances beginning only in January 2028.
In a Nutshell
- Cabinet approved the National Pay Scale 2026 on 31 August, keeping 20 grades and raising basic pay by 100% to 142%, with the biggest increases going to lower grades.
- Grade 20 basic pay will rise from Tk8,250 to Tk20,000, while Grade 1 will rise from Tk78,000 to Tk156,000, below the Tk160,000 proposed by the Pay Commission.
- The full basic salary increase will come in three stages between July 2026 and July 2027, while revised allowances will take effect from January 2028, and pension increases will also be phased in.
- The BNP government’s 10-member secretaries’ committee had earlier recommended a maximum 100% increase, scaling back the larger increases proposed by the Pay Commission.
- The 23-member Ninth National Pay Commission, formed by the interim government in July 2025, submitted its report on 21 January 2026 after reviewing pay against inflation, living costs and economic conditions.
- The commission had proposed keeping 20 grades while raising basic pay from Tk8,250 to Tk20,000 at Grade 20 and from Tk78,000 to Tk160,000 at Grade 1, producing increases of 100 to 142 percent.
- Its recommendations also included a higher Boishakhi allowance, wider transport allowances, higher pensions, age based medical support for pensioners and health insurance.
Context
Government employees remained on the 2015 pay scale for 11 years before today’s new payscale. They received annual increments of around 5% during that period, but there was no new basic salary structure.
The interim government’s Pay Commission proposed a broad reset across different grades rather than another routine increment, with its recommended increases favouring lower-paid employees. Its estimated additional annual cost was about Tk106,000 crore. The Pay Commission’s report was complete by January 2026, meaning that the onus fell on the BNP government to decide.
The Cabinet’s final decision instead moved back towards the Pay Commission on basic salaries, while changing the top salary from Tk160,000 to Tk156,000 and stretching implementation across two financial years. The final package is estimated to add Tk105,580 crore to annual government expenditure and affect around 2.4 million serving employees, as well as more than 900,000 retirees and other eligible beneficiaries.
Why It Matters
The current Cabinet ultimately restored the larger lower-grade increases, showing that the final policy is closer to the commission’s January recommendations than to the government’s own secretaries’ committee proposal.
The phased rollout is another important introduction in the payscale. Accounting for inflation, the government has distributed the increase over three phases and delayed revised allowances until 2028, allowing it to manage a salary bill that will eventually cost more than Tk105,000 crore extra every year.
What We Think
The new pay scale brings long-awaited relief for public employees after 11 years under the 2015 structure. The larger increases for lower grades also give the package a stronger equity focus, as inflation and rising living costs have hit lower-income households hardest.
But the phased implementation reveals the government’s fiscal caution. Basic salaries will rise in stages, while revised allowances will begin only in January 2028, meaning employees face a longer wait for the full benefit. The additional annual cost of more than Tk105,000 crore also raises broader questions about budget pressure, borrowing and inflation management.
BNP has delivered a new pay scale within its stated timeframe. Its wider pledge of inflation-linked wage reviews every two years now remains the more important test, particularly if another decade-long gap is to be avoided.