ISLAMABAD: In a significant move to offset the impact of rising living costs, the federal government has approved an 85% increase in the house rent allowance for government employees.
The Ministry of Finance has formally sanctioned the proposal, which will be presented to the federal cabinet in the upcoming meeting for final approval, official sources confirmed on Sunday.
The increase will apply to all federal government employees from grade 1 to 22, covering both permanent and contract staff across all departments. This decision is expected to benefit thousands of civil servants, providing much-needed financial relief amid high inflation and surging housing costs.
Importantly, the revised house rent allowance will be calculated on the current basic salary rather than the outdated 2008 pay scale, marking a major shift in government policy. Employees have long demanded the update, arguing that rental payments had become unaffordable under the old system.
According to officials, the change will significantly raise take-home pay for lower-grade employees, who have been disproportionately affected by high rents in urban areas. Senior officials will also see substantial improvements in their allowances.
The Finance Ministry had earlier notified a 10% ad hoc relief and a 30% disparity reduction allowance (DRA) for federal employees. This latest hike in house rent allowance is part of the government’s broader strategy to support the public sector workforce and ease economic pressures.
Once approved by the cabinet, the revised allowance will be implemented with immediate effect.
