PESHAWAR, June 8: The NWFP government’s annual salary bill is likely to rise by over Rs3.3 billion during the 2006-07 financial year because of the federal government’s decision to increase public sector employees’ salary by 15 per cent, official sources said.
“The province has no choice but to increase the salary of public sector employees,” says a finance manager of the provincial government.
The provincial government had moved the finance division, Islamabad, in 2005-06 for providing additional funds to help it overcome financial implication resulted by the federal government’s similar move last year when salaries of public sector employees were raised from 18 to 24 per cent from July 1, 2005.
However, the request remained unheeded for, leaving the province to bear the over Rs2 billion increase in salary bill on its own during 2005-06.
The provincial government during the coming fiscal year would again bear on its own the financial burden to be resulted by the fresh increase. The annual salary bill, official sources said, would swell well over Rs25 billion during the next financial year.
The province has over 182,000 employees, with majority employed by the education department, followed by health and police departments.
Public sector’s employees number is likely to grow considerably during the next fiscal year as Chief Minister Akram Khan Durrani has approved recruitment of thousands of employees on contractual basis in education and police departments. Formal announcement to this effect will be made by Provincial Finance Minister Sirajul Haq in his budget speech on June 17, according to sources. Fresh appointments, said the sources, would further add to the provincial government’s salary bill.
According to conservative official estimates, the move would increase the salary bill by about Rs800 million, in addition to the financial implication to be resulted by the 15 per cent pay raise announced in the federal budget for the next financial year.
Similarly, the annual pension bill of the provincial government, the officials said, would also grow by over Rs500 million, taking the expenditure under this head to over Rs4 billion in the next fiscal year from the existing level of Rs3.7 billion.
In this way, the increase in pay and pension would continue to claim about 45 per cent of the total annual revenue receipts of the province, making the provincial government’s job difficult to keep its wage bill at around 4-4.1 per cent of the provincial GDP or 45 to 47 per cent of the total annual expenditure in line with its Structural Adjustment Credit agreement with the World Bank.
However, the officials said, the province would manage to adhere to the World Bank’s condition in case the centre fulfils its commitment to transfer greater amount of funds during the next financial year under the interim National Finance Commission award, which would become effective from 2006-07.