Leading Issues in the Economy of Pakistan: Agenda for Reforms Table 16.6: Growth in Compensation of Government Employees 2014-15 2020-21 Total Bill of Compensation to Government* Employees, Civil and Military % of Current Expenditure Employment ­(million) Compensation per Employee ­(Annual in Rs) *Both federal and provincial Source: PES, MOF 1911 33.0 3.95 483,800 3424 37.7 4.62 741,000 (Rs in Billion) Annual Growth Rate(%) 11.7 3.1 8.5 The consequence is that with a near 5 percent growth annually in employment and almost 9 percent in average compensation, the salary bill is consuming a larger part of the budget of federal and provincial governments. The share of the compensation bill has gone up from 33 percent to almost 38 percent. The time has come for restricting the employment growth in the government sector. Barring the service departments, there should be a ban on recruitment for the next three years and all vacancies currently notified be cancelled. Further, the increase in emoluments should be restricted to a maximum of 10 percent each year. 16.4 Down-Sizing of Federal Government Following the 18 th Amendment and the potential transfer of functions to Provincial Governments, there was the expectation that the Federal Government would contract in size. But this has not happened. There are 35 Ministries, 42 Divisions and over 369 Attached Departments/Autonomous Bodies. The number keeps increasing. The time has come to undertake a high priority zero-based budgeting exercise to rationalize the size of the Federal Government, starting with the handover of higher education to Provincial Governments. 16.5 Managing the Cost of Pensions The pensions paid annually have risen to almost Rs 1100 billion(Federal and Provincial Governments: Rs 594 billion. Military: Rs 406 billion) in 2021-22, with near doubling over the last five years. The following proposals may be implemented: a) Setting a target of zero growth in pension liabilities over next 3 years. 168