The federal cabinet has approved an 85 percent increase in the rental allowance ceiling for government employees from BS-1 to BS-22 in major cities, including Islamabad, Rawalpindi, Lahore, Karachi, Peshawar, and Quetta. This move, intended to offset surging housing costs, amounts to what many are calling a “big salary boost” for federal staff.
Background: Rising Housing Costs and Stagnant Allowances
Over the past few years, rental rates in Pakistan’s major urban centres have climbed sharply, driven by inflation, population growth, and a shortage of government-owned accommodation. The previous revision to rental ceilings dates back to 28 September 2021, leaving many federal employees paying out of pocket to meet market rents.
What the Increase Entails
According to the Ministry of Housing and Works, the rental ceiling for hiring residential accommodation for federal officers and staff will now be enhanced by 85 percent with immediate effect, following concurrence from the Finance Division. This enlarged cap applies across all grades from BS-1 to BS-22, and covers the major stations specified.
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Why It Is Considered a Salary Boost
While the base salary of government employees may remain unchanged, the increased housing allowance effectively raises their disposable income. Aligning housing support with real market rents eases employees’ burden by covering the gap between outdated ceilings and actual costs. In essence, the allowance increase functions like a pay rise for many staff.
Implications and Next Steps
The updated rental ceiling is expected to improve the morale and financial well-being of federal employees struggling with housing costs. Officials must implement new ceilings by updating allowance schedules, informing departments, and ensuring eligible employees receive the increased benefits properly. This decision may trigger ripple effects, increasing pressure on rental markets and prompting similar allowance demands in other cities nationwide.
Conclusion
Government approves 85% housing rental ceiling increase, giving major financial relief to federal employees facing rising living and housing expenses. By increasing rental allowances to market levels, the government delivered financial relief to public employees without modifying their base salaries.
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