The finance minister announced during his budget speech that the salaries of government employees will be hiked by 10% and pensions by 7%.

The pay raise will be applicable to employees in grades 1 to 22. It was also decided to provide a 30% hardship reduction allowance to eligible employees.

Moreover, the minister also announced a special relief allowance for officers and soldiers of the armed forces, which would be met from the defense budget of the financial year 2025-26.

A special conveyance allowance for special employees was also announced and an increase in special conveyance allowance from Rs4,000 to Rs6,000 per month.

Earlier, the federal cabinet, chaired by Prime Minister Shehbaz Sharif, had approved proposals for the Federal Budget 2025-26, including a 10% salary increase for government employees and a 7% hike in pensions.

The finance bill was also greenlit during the meeting, with various measures aimed at providing relief to the salaried class, sources confirmed.

The cabinet has put forward a 10% salary increase and a 7% pension hike for government employees and retirees, respectively.

The federal government was evaluating three proposals to raise government employees' salaries in the upcoming fiscal year's budget, including whether salaries would increase by 6%, 10%, or 15%.

Government employees have urged the administration to align salary hikes with soaring inflation, with many demanding a minimum 50% increase. Failure to meet this demand could lead to widespread protests, employee representatives have warned.

These proposals were discussed during the high-level cabinet meeting chaired by the prime minister, where the Finance Ministry advocated for minimal adjustments -- citing fiscal constraints. Despite this, employees argue that stagnant wages amid rising living costs have become untenable.

Addressing the cabinet meeting, Prime Minister Shahbaz Sharif extended heartfelt Hajj and Eid-ul-Adha greetings to the nation and the global Muslim Ummah, emphasizing unity and resilience in the face of challenges. In his address, he condemned the ongoing atrocities in Palestine and Kashmir, calling for immediate global action to secure a ceasefire.

"No amount of condemnation is sufficient for the brutality inflicted upon the people of Palestine and Kashmir," he stated. "The innocent blood of women, children, and the elderly continues to be shed. World powers must urgently leverage their influence to enforce a ceasefire."

He reaffirmed Pakistan’s unwavering support for the people of Palestine and Kashmir, expressing confidence that their sacrifices will lead to their eventual freedom. "Pakistan has always stood by the oppressed in Palestine and Kashmir and will continue to do so," he added.

Reflecting on domestic challenges, PM Shehbaz acknowledged the significant sacrifices made by the Pakistani people, particularly the salaried class, over the past 18 months. "The nation and the government have navigated extraordinary challenges, which is no small achievement," he said.

He highlighted that Rs400 billion has been contributed to the national treasury, signaling economic progress. "With the collective efforts of the nation and the government’s hard work, Pakistan is poised for a transformative leap forward," he declared, citing positive inflation figures from international sources.

The PM also addressed recent tensions, noting that Pakistan faced a formidable military and economic adversary in a recent conflict. "The enemy claimed they had no competition with Pakistan, but we will surpass our adversaries and secure Pakistan’s rightful place on the global stage," he asserted. He urged unity, stating, "The opportunity has arrived for us to move forward together."

On the issue of water security, the premier firmly rejected attempts to weaponize water resources. "No one can use water as a weapon against us, and we will steadfastly protect our water rights," he emphasized. He commended the efforts of the Deputy Prime Minister, relevant ministers, and a committee of experts for their diligent work on resolving water-related challenges.

He also expressed gratitude to the finance minister and associated teams for their swift preparation of the Federal Budget 2025-26. "The budget was crafted with remarkable speed and efficiency, reflecting our commitment to addressing the nation’s needs," he said.

He eventually called for collective action to elevate Pakistan’s global standing, urging citizens to unite in building a prosperous future.