How Will Public Sector Salaries Increase Under Budget 2025?: Full Details

The government has announced a significant salary increase for public sector employees under Budget 2025, marking the first major revision in nearly a decade.

This move aims to provide a decent standard of living for public servants while ensuring the government can attract skilled professionals without placing an excessive burden on state finances, President Anura Kumara Dissanayake, presenting the Appropriation Bill 2025 said.

Salary Increase Details: The minimum monthly basic salary will be raised from Rs. 24,250 to Rs. 40,000, reflecting a net increase of Rs. 15,750. Additionally, the current ad-hoc interim allowance and special allowance will be integrated into the basic salary, resulting in a net increase of Rs. 8,250 for the lowest salary bracket.

This increase will apply to judicial services, public corporations, statutory boards, university staff, and officers of the tri-forces, ensuring uniformity across public sector employment.

Annual Salary Increment Adjustment: In addition to the base salary increase, the value of the annual salary increment will rise by 80 percent. The minimum annual salary increment, which currently stands at Rs. 250, will be raised to Rs. 450. This adjustment will be applied consistently across all public sector employees.

Implementation Plan: Given the current fiscal constraints, the salary increase will be implemented in phases:

From April 2025, employees will receive Rs. 5,000 plus 30 percent of the remaining increase.
The remaining 70 percent will be disbursed in equal portions starting in January 2026 and January 2027.

To accommodate this increase, Rs. 110 billion has been allocated for 2025, with the total estimated cost reaching Rs. 325 billion.

Impact on Retirement Benefits and Loans: Employees retiring on or after 1 January 2025 will have their retirement benefits calculated based on the new salary structure, ensuring they receive enhanced benefits under the revised scheme.

Additionally, the distress loan limit for public servants will be increased from Rs. 250,000 to Rs. 400,000, aligning with the salary increase and providing greater financial security for state employees.