KUALA LUMPUR (Oct 13): The federal government's expenditure on emoluments is expected to increase RM4.37 billion or 4.79% year-on-year to RM95.64 billion in 2024, representing 31.5% of its operating expenditure (opex), according to the latest budget announcement by Prime Minister Datuk Seri Anwar Ibrahim. 

At the budget speech in Dewan Rakyat, Anwar announced a slew of incentives for the civil service, including RM2,000 cash to Grade 56 civil servants and below, including contract appointments. 

He also announced RM1,000 cash for all public sector appointments including policemen, firefighters, army personnel and all other uniformed bodies. 

The payout, Anwar said, is part of incentives provided by the government as it undertakes a study on the public service remuneration scheme, which will be completed at the end of 2024. 

Meanwhile, Anwar also announced a RM1,000 cash handout to all government retirees, including non-pensioners, by February next year “to reduce the burden of preparing for children’s school season, and for preparation going into Ramadhan and Syawal”. 

According to data from the Ministry of Finance, federal government retirement charges are expected to rise RM370 million or 1.15% y-o-y to RM32.45 billion in 2024, making up 10.7% of the government's opex.  

Of that amount, RM26 billion comprises pension payments to around 971,000 pensioners, while the remainder is for gratuity payments and cash awards in lieu of accumulated leave. 

Combined, the two components will amount to RM128.09 billion — up 3.84% y-o-y — representing 42.16% of the federal government's opex of RM303.8 billion.  

It is understood that Malaysia had 1.71 million civil servants going back as early as 2019. The federal government also covers the pension of state-appointed civil servants. 

Also contributing to the emoluments expenditure are annual salary increments and new hires to fill critical positions, particularly in health and education services, according to the Economic Report 2023/2024.  

“The government is considering shifting towards a defined contribution scheme to effectively manage pension obligations in the future, as pension commitments are expected to escalate further,” added the report. 

In efforts to reduce its opex, the government formed a five-member advisory committee in February this year to advise it on the matter, as well as other issues including subsidy restructuring, social protection, government-linked companies and national debt. 

Go here for our comprehensive Budget 2024 coverage.