Relief for some, pressure for many

For 1.46 million government employees, the new pay scale brings a long-awaited boost in income.

For millions of private-sector and informal workers, however, the story is very different: wages lag behind inflation as food, rent, transport and household bills continue to climb.

There are currently around 14,64,350 government employees in service, according to official data. But the Labour Force Survey 2024 shows the much larger employment picture.

Bangladesh had about 7.17 crore employed people, of whom 5.80 crore, or 84 per cent, were working in the informal sector. For these workers, there is no equivalent national pay scale.

Abu Taleb, who works for a private real estate company in Dhaka, said that his salary remained unchanged in 2024 and 2025 before rising by Tk 5,000 this year to Tk 45,000 a month. But his household budget has continued to deteriorate.

“My house rent has increased three times over the past three years, and the prices of essential goods have also gone up,” he told The New Nation.
“Three or four years ago I could save Tk 4,000 to Tk 5,000 a month.

Now I can’t save anything. Instead, I struggle to make ends meet at the end of the month and sometimes have to borrow.”

From January 2022 through June 2026, wage growth failed to exceed inflation in any month, according to Bangladesh Bureau of Statistics. In July, inflation stood at 9.16 per cent while national wage growth was 8.18 per cent.

The World Bank has reached a similar conclusion. It said inflation remained high at 8.5 per cent in FY2026 and that wages of low-income workers had failed to keep pace with prices, reducing their purchasing power.

National poverty rose to 21.4 per cent in 2025 from 18.7 per cent in 2022, putting an additional 1.4 million people into poverty.

For households outside the government sector, the pressure comes from almost every direction. Food bills have increased. Rents and utility charges have risen.

Transport costs are higher. Education and medical expenses consume a growing share of household income.

Even a widespread shortage of piped gas has left many urban households struggling to cook normally.

Families have increasingly had to rely on electric cookers or LPG cylinders, even as power cuts make electric alternatives more expensive and unreliable.

Halima Khatun, a private-sector employee living in Pallabi, told The New Nation, “Cooking becomes almost impossible on weekends or national holidays.

On those days, we have no choice but to rely on electrical appliances like rice cookers or air fryers.”

She considered buying an induction cooker to cope with the gas shortage but abandoned the idea because she feared a higher electricity bill.

At kitchen markets, meanwhile, consumers are finding that their money buys less.

“Whenever I go shopping for essentials, I find the price of yet another item has gone up,” a Dhaka resident, Sharmin, told The New Nation.

This is particularly significant because about 84 per cent of the country’s employed population works in informal sectors.

The proposed pay rise is also raising concerns among businesses and industries already struggling with high operating costs.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told The New Nation, “This is an unusually large increase in salaries.

As a result, all sectors will come under pressure.” “Government employees are paid from taxpayers’ money.

But where will businesses find the money to increase salaries when many companies are already struggling to pay their existing wages?” he said.

Hatem warned that higher wage costs could make it difficult for businesses and factories to remain operational in the country’s fragile economy.

“Many businesses may not be able to continue operating their businesses and factories. Some may eventually be forced to shut down.

And when a factory closes, it is not only the owner who suffers. The workers and their entire families are affected as well,” he said.

He said the concern was particularly serious because Bangladesh was already facing growing unemployment.

“The government is talking about employment. But our unemployment problem is already increasing.

If the government pay rise pushes up the prices of goods, people’s purchasing power will fall and they will reduce their spending,” Hatem said.

“When people buy less, the circular economy is affected. The greater the circulation of money, the stronger the economy becomes,” he said.

Hatem acknowledged that government employees would naturally welcome the salary increase but said the government should also consider what ordinary citizens would receive in return.

“It is understandable that government employees are happy. But the question is: will they now receive better, bribe-free public services from these government employees?” he said.

Speaking to The New Nation, CPD Research Director Khondaker Golam Moazzem said the additional purchasing power of government employees would have an impact on the market.

“Higher salaries could push up prices of essential goods, rents and transport costs, putting additional pressure on people outside the public sector,” he said.

He called for stronger private-sector wage growth, continued social protection and tighter monitoring of markets, including action against market syndicates.

Anwar-Ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, told The New Nation that it was not the right time to announce the new pay scale for government employees as the country was already facing persistent inflationary pressure.

He warned that higher government salaries could increase inflationary pressure and put private-sector employees and labour-intensive industries under additional strain.

Private employees would understandably demand higher salaries, he said, but the question was whether businesses could afford them.

Industry is already dealing with severe shortages of gas and electricity, high lending rates and other difficulties, Parvez said.

If companies are forced to increase wages while facing those pressures, production costs could rise and competitiveness could suffer.

The broader fiscal picture also remains challenging.

The World Bank said the country’s tax-to-GDP ratio fell below 7 per cent in FY2025, the lowest level in 15 years, limiting the government’s capacity to invest in priority areas.

It also warned of vulnerabilities in the financial sector, weak investment and a difficult business environment.

The Cabinet approved the new pay structure on 31 August, raising basic salaries by up to 142 per cent.

The minimum basic salary will rise from Tk 8,250 to Tk 20,000, while the maximum will double from Tk 78,000 to Tk 156,000. The new pay scale will also benefit 9.25 lakh retired employees and other eligible beneficiaries.

Cabinet Secretary Nasimul Gani said the new structure was approved after considering the government’s financial capacity, the broader economic situation, inflation, the cost of living and public servants’ living standards.

But experts and industry insiders said that the government has a legitimate responsibility to ensure that its employees are paid fairly.

But it also has a responsibility to the far larger population whose incomes do not automatically rise with government salaries.