Pakistani companies to adjust compensation due to inflation

Pakistani companies to adjust compensation due to inflation

Companies to adjust compensation due to inflation


Inflation is a global phenomenon that has impacted many countries worldwide resulting in high fuel prices. Pakistan is also witnessing unprecedented economic turmoil, with inflation rate rising at an exponential rate. Keeping in view the current economic situation and the vision of the Pakistan Government to support low paid population through various possible initiatives during these challenging times, the Bank of Punjab has taken positive measures for its employees.


"Many organizations are willing to take a less competitive approach to compensation while they wait for the labor market to cool down"

- Tony Guadagni -


It is also mentioned in a tweet that with the consent of the cabinet  the PM has approved a raise in government employees by 15%. This message is termed for the betterment and economic stability for everyone.



For companies, raising base salary and providing benefits has been the primary way to attract and retain talent. However, in these times where inflation is highly volatile – especially in Pakistan –  organizations have devised different plans to act on so they keep the employees retained.


Regarding this issue, companies in Pakistan are considering to:

  1. Give a pay raise in to employees’ base salary
  2. Give inflation adjusted bonuses to employees
  3. Declare employees as freelancers


An average pay raise is typically given in the first quarter every year. But due to soaring inflation, rising prices and a tight labor market there are conditions that warrant off-cycle increment in salaries.


A raise in basic salary means payment above Prior Base Salary that increases Base Salary for the following contract year. Giving a pay raise to employees to cover inflation is beneficial and it also improves employees’ retention and it boosts their morale as a reward for their hard work


Inflation adjustment in pay means to first have an overview of change in inflation rate over the time period and then determining the percentage that sets the best for employees as an increase in their pay (a raise of 3.3% is generally considered) and with that considered percentage, provide monthly bonuses to all the employees. Another similar method is to first convert the base salary in dollars to have an idea of pay benchmark and then transfer it to employees – with this inflation is adjusted in salary.


We at RLTSquare – as Pakistan’s leading web development agency – did the best for its employees in these times of inflation and high prices. The company announced in June 2022 that for all the employees, the base monthly salary in PKR will first be converted in dollars (USD). So, whenever there is a rise in USD, it will eventually increase in PKR. This is for their ease that employees do not have to worry about an unpredicted rise in consumer goods with their inflation adjusted salaries.


When employees feel at ease and they do not have stress about such issues, they perform the best for the progress of the company. For this, companies are now considering to:

  • Provide signing bonuses (an opportunity for managers to incentivize candidates more quickly and address immediate talent gaps)
  • Offer lucrative benefits (tuition reimbursement or retention bonuses)
  • Decouple pay and location (organizations adopt hybrid systems, decoupling pay and location can improve an organization’s competitive position)


 For the last part, declaring employees as freelancers would not be a better option for working agencies with multiple clients. This is because if a company declares all of its employees/developers as freelancers, it means that employees are not 100% linked with the company and are only working on project-bases for a limited time.


It also means that the company allows their employees to work with any other client in parallel to their commitment or even work in a business that is in direct competition. Yes, it does mean that the tax policy on their salaries will change and the amount will be transferred to their account in dollars but it also noted that this will affect the company’s financial statements and its reputation.



So, based on what is the better workable option for companies is to provide pay raises or  incentives to their employees for the good of their employees in these hard times.

Back to blog