Cabinet approves Rs. 25,000 cost of living allowance, 24% salary increase for 2025

By Chaturanga Pradeep Samarawickrama  
 

The Cabinet has approved a monthly cost of living allowance of Rs. 25,000 and a 24% increase in the minimum initial monthly salary for government employees, effective from the 2025 budget, Cabinet Spokesman and Minister Bandula Gunawardana said.  
He said that Cabinet approval was granted on May 27, 2024, to appoint a specialist committee. This committee is tasked with submitting a report with recommendations for revising salaries across all sectors of the public service, based on the 2025 budget. The report will review the salaries, wages, and other remunerations of the government sector.  
As the Finance Minister, the President granted policy approval for the following proposals from the report: These proposals will be included in the 2025 budget.  
- A monthly cost of living allowance of Rs. 25,000 will be paid to all government employees, revised every three years, using 2025 as the base year. This includes various adjustments and allowances. The minimum initial monthly salary for government service will increase by at least 24%, with a gross salary of Rs. 55,000, including the cost of living allowance. Other designations’ initial salaries will be adjusted accordingly.  
- This new salary and allowance method will apply to all government institutions, excluding trading state companies and banks.  
- Measures will be taken to limit the total public sector staff to one million or fewer by 2030.  
- E-governance will be introduced across every sector of the public service within three years, supported by digitalisation, automation, and public investment.  
- A medical insurance scheme offering attractive benefits with a minimum monthly contribution of Rs. 1,000 will be introduced for all government sector employees and pensioners, effective January 2025.  
- A scientific study will be conducted in 2025 to analyse the entire state sector’s staff and services. Public employees will be provided with performance indicators, and salary increments will be awarded based on progress.  
- Salary increments for government officers who retired before 2020 will be awarded, and their salary anomalies will be resolved by revising their pensions.  
- Starting January 2025, pensioners will receive 50% of the cost of living allowance given to active public employees.  
- This salary method will be implemented on January 1, 2025, considering the state’s financial capacity and within the existing tax policy.  
However, the entire public service will categorise all designations into four levels. These levels will be grouped into sub-categories of recruitment. This categorisation will be based on the Sri Lanka Qualifications Framework (SLQF) and the National Vocational Qualification (NVQ). It will also consider the relevant role and responsibility of each employee. Additionally, the categorisation will focus on the ability to attract and retain skilled employees, particularly in specialised roles.