The Ethiopian government has announced a major salary overhaul for its civil servants, effective starting September 2018 (Ethiopian calendar). The move, part of a broader commitment to improve citizens' living conditions and address the pressures of inflation, will see the minimum government salary increase from 4,760 birr to 6,000 birr.

The press release highlights that the government understands the financial strain faced by its permanent employees, who have not seen their income increase at the same rate as the country's economic growth. This has been particularly challenging for those on a fixed income, especially as the cost of living has risen.

Key details of the salary adjustment include:

• Minimum Salary: A new minimum salary of 6,000 Birr.
• Graduate Pay: The starting salary for a degree graduate will be raised significantly from 6,940 Birr to 11,500 Birr.
• Top Earners: The maximum government employee salary will increase from 21,492 birr to 39,000 birr.

This extensive salary and income tax reform is projected to require an additional budget of over 160 billion Birr, bringing the total annual government spending on salaries to 560 billion Birr.

The government acknowledged that, this is not a final solution but a crucial step. The statement emphasized that sustained improvements in living standards depend on a stronger national economy and that all citizens, including government employees, have a responsibility to contribute to this growth.

To mitigate potential inflationary effects, the government warned that it will implement strict controls and take exemplary action against any businesses that illegally and unjustifiably raise prices in response to the salary increase.

Beyond the pay raise, the government stated its intent to address other challenges facing employees, including housing and health insurance, in future initiatives.