According to the Redbook published by the Finance Ministry which contains details about the government’s income and expenditure, the cost of paying staff salaries has jumped by Rs 19.42 billion while pension payments have gone up by Rs 9.5 billion. Expenses for retirement benefits, benefits for reserved leave and support to expired employees have also increased.

After the latest hike, a chief secretary will draw a total of Rs 45,270 a month, while secretaries get Rs 43,130. Non-gazetted lowest-level employees get Rs 13,620. At the highest level, the President will get Rs 120,360 per month, while Prime Minister’s salary will be Rs 61,820.

The current budget has allocated Rs 1.04 billion for government employees except teachers. Following the raise, pensioners will get Rs 29 billion. When the salary of government employees rise, pensions swell by two-thirds of the increase in pay.

Finance Secretary Yubaraj Bhusal said that salaries had been increased by 10 percent and the grade doubled which cost the state around Rs 20 billion. “Initially, we had planned to increase the allowance as per inflation but later decided to hike the salary itself which will also raise their income even after retirement.”

Due to current expenditure increasing at a faster rate compared to capital expenditure, a pay raise has always been a tricky issue for the government.

Although the salary structure of Nepal’s government employees is considered to be still low compared to global rates, it also contributes to a rise in recurrent expenditure which takes away resources from development purposes. According to the budget, the share of recurrent expenditure is 64.5 percent while the capital budget accounts for 18.9 percent and financing accounts for 16.6 percent. Experts said a raise for government employees should not be opposed as long as the country’s income also grows.

Former joint secretary of the government Bodh Raj Niraula, who served as member secretary in the Government Budget Management and Expenditure Framework Review Commission 2009 led by former lawmaker Narayan Dahal, said that a salary rise of 10 percent compared to revenue growth of 20 percent should not be a big issue.

However, the question is whether the hike in salary has led to an improvement in the per-formance of government employees.

Experts said that ever increasing pension payments were a matter of greater concern than a pay rise.

The government has been allocating funds for pension payments from its budget. As the country does not have a contribution-based pension system, the government is forced to allocate more money every year.

“If a contribution-based pension system is not implemented immediately, a situation may arise in the future where pensioners may no longer be able to get pensions,” said Niraula.

Different commissions formed to review public expenditure have suggested enforcing a contribution-based pension system but the government has not been able to do so.

The government had planned to introduce such a system in this fiscal year but  Finance Secretary Bhusal said the plan had to be abandoned due to lack of adequate preparation