World Applied Sciences Journal 18 (9): 1220-1225, 2012 ISSN 1818-4952 © IDOSI Publications, 2012 DOI: 10.5829/idosi.wasj.2012.18.09.1251 Corresponding Author: Imran Haider Naqvi, Manager Research & Development, ORIC, COMSATS Institute of Information Technology, Lahore, Pakistan. 1220 Inflation Overrides Low Differential Basic Pay Scales in Pakistan Imran Haider Naqvi and Abdul Shakoor Razvi 1 2 Manager Research & Development, ORIC, 1 COMSATS Institute of Information Technology, Lahore, Pakistan Department of Management Sciences COMSATS Institute of 2 Information Technology, Lahore, Pakistan Abstract: While trying to help its employees fight inflation and fluctuation in food basket price through yearly pay raises, the government of Pakistan failed in its obligations. Despite annual increase in pays, the low scaled government employees always get further compressed purchasing power. The problem resides in the tight differentials in the Basic Pay Scales. Annual pay raises are always announced as a percentage of basic pay for all scales resulting into inadequate increase in comparison with prevailing unleashed inflation for low paid employees. The major reason for increase in price of food basket is the oil price. Nevertheless, the tight differential in low scales demands optimization, remedial approach can be linking pay raises with oil prices, reducing unit production costs by increasing productivity to lower food prices, monetizing perks and privileges of top level managers etc. Key words: Basic Pay Scales Low Income Employees Food Basket Petroleum Prices INTRODUCTION obtain recruits of the right stamp and to maintain them The Pakistan’s government is obliged to consider them from temptation and keep them efficient for the term various factors while compensating its employees of their service [2]”. Nevertheless in Pakistan there had especially the low paid staff in particular. Dominating been various pay commissions to review basic pay factors in such decision making are usually the available structure (BPS) for government employees of all cadres, budget, compensable factors, minimum wage necessary the spirit of Islington’s principle is missing in the BPS to buy a food basket in view of the prevailing especially for low paid employees. No standard of human consumer price index, inflation, fluctuation in prices and rights and international law restrict comfort and dignity retention of efficient employees [1]. The weight cum for only top officials. BPS in Pakistan for low paid significance given to each of these factors in calculating government employees however restricts it as mentioned the overall pay is a matter of subjectivity and in Tables 2 & 3 [12]. contingency. The ideal bottom line is that even the lowest Pakistan’s BPS creates two classes of government paid employee in Pakistan should be able to live employees, which are labelled as ‘Haves’ (BPS 16-22) gracefully, being able to meet necessities of life without and ‘Have Nots’ (BPS 1-15). The compensations for humiliation and tension within his/her wages/salary. ‘Have Nots’ group are compressed to minimum differential Under existing circumstances such desired standard in scales 1-15 while in the ‘Haves’ group salaries are seems a dream. swelled to facilitate elites. Due to the compression in In 1912-15, the Islington Commission indicated scales 1-15, whenever an increase in pay is announced by guidelines in its report to help governments in ensuring the Pakistan’s government, as it is done in percentage and effective compensation that this study quotes, “The only not the amount, the low paid employees that represent safe criterion is that Government should pay so much majority of population get the minimum advantage and and so much only to their employees as is necessary to relief. in such a degree of comfort and dignity as well shield