The federal government has approved a significant 85% increase in the house rent allowance for all federal employees, aiming to provide financial relief amid the rising cost of living.
According to official sources, the Finance Ministry has approved the summary, which is now set to be presented to the federal cabinet for formal endorsement. Once approved, the revised rates will apply to all employees from Grade 1 to Grade 22.
The revised house rent allowance will be calculated based on the current basic pay scales rather than the 2008 pay structure that has long been in use. This marks a major shift in how the allowance is determined, ensuring that it better reflects present-day salary structures and inflationary trends.
Officials said the move comes in response to long-standing demands from government employees who have argued that the existing allowance no longer meets their housing needs due to sharp increases in rent, especially in major cities like Islamabad, Karachi, and Lahore.
The adjustment is expected to significantly improve the financial well-being of thousands of federal workers, helping them manage household expenses more effectively.
Government insiders noted that this increase is part of broader efforts to revise public sector benefits and align them with economic realities. The Ministry of Finance had been reviewing multiple proposals for several months before finalising this one for cabinet approval.
Experts believe that while the increase will provide much-needed relief, it could also have fiscal implications, potentially increasing the government’s salary-related expenditure by billions of rupees annually.
Nonetheless, officials argue that the move was essential to support government employees facing financial strain due to continuous inflation and rising housing costs.
The proposal is likely to receive swift approval from the cabinet, paving the way for implementation within the ongoing fiscal year.
