Ethiopia Approves 80% Civil Service Pay Rise, Signals a Costly Reshaping of Fiscal Priorities
Baseline Team
18 Aug, 2025
The Ethiopian federal government has announced a sweeping salary hike for civil servants, raising wages by as much as 80 percent in an effort to cushion workers from surging living costs. The decision marks a decisive reshuffling of fiscal priorities, one that could redefine the balance between wages, debt, and development spending.
Officials framed the move as a lifeline for workers squeezed by years of inflation. But critics warn that such a massive injection of spending could backfire, further driving up prices unless matched by productivity gains or broader economic reforms.
Under the adjustment, the minimum monthly salary for public employees will rise from 4,760 birr to 6,000 birr, while the maximum salary will jump from 21,492 birr to 39,000 birr. Entry-level pay for university graduates will also increase from 6,940 birr to 11,500 birr. Specialized professionals working in sectors outside the core civil service will likewise see their salaries revised.
The changes are projected to cost the government an additional 160 billion birr, lifting its total annual wage bill to 560 billion birr.
Past pay adjustments have sometimes triggered price hikes in the private sector, as businesses raise the cost of goods and services in anticipation of increased demand. The government said it will impose strict monitoring and “corrective measures” against illegal markups.
Whether the salary boost actually translates into improved purchasing power, however, may depend less on the figures on paper than on the state’s ability to curb inflationary spillovers and rein in Ethiopia’s widening budget deficit.
