Federal authorities are proceeding with a wage reform for the public service, a long-anticipated move to address economic hardships among public employees. According to officials familiar with the matter, a comprehensive study proposing a 91.4 billion Br (845.7 million dollars at last week's exchange rate) budget to increase salaries for over 2.4 million civil servants reached Prime Minister Abiy Ahmed's (PhD) Office earlier this month.

Led by Teferi Demeke, an advisor to the Finance minster, and Mekuria Haile, head of the Commission, the proposal incorporates 923 federal government officials and Members of Parliament, as well as personnel in regional and federal police forces, the armed forces, and the Information Network Security Agency (INSA).

Of the proposed budget, 71.8 billion Br is earmarked directly for public service employees, with the remaining funds designated for higher officials and members of the security sector. The wage adjustments are designed to vary by grade, offering the most substantial increases to the lowest-paid public service members. Those earning around 1,100 Br a month stand to gain the most, while employees with salaries up to 20,468 Br will see more modest raises ranging from 332.7pc to five percent, respectively.

According to Yigezu Jemaneh, head of work evaluation and payment research at the Civil Service Commission, the study incorporates factors such as GDP productivity, household consumption, and data from the Central Statistics Service's (CSS) household consumption and expenditure survey.

"We're waiting for approval," Yigezu told Fortune.

Finance Minister Ahmed Shide's recent letter to the Prime Minister's Office justified the wage adjustment on prevailing economic shocks due to inflation, exacerbated by wide-ranging policy reforms. Notably, the study was conducted two months before the liberalisation of the exchange rate regime in late July, but considerations were made for its potential effects, claim people close to the progress. An official from the Ministry of Finance confirmed the credibility of the study and its arrival at the Prime Minister's Office.

"It's a sensitive issue," he said.

He disclosed that Minister Ahmed is expected to brief Prime Minister Abiy's cabinet on the new developments soon.

Senior Ministry officials have been uneasy since part of the study and the accompanying letter were leaked on social media platforms before approval by the Council of Ministers. A source disclosed that investigations involving the Information Network Security Agency (INSA) are underway to determine the source of the leak.

"If the leak is from the Ministry, proper administrative measures will be taken," an official said, adding that they believe the leak originated outside the Ministry.

The wage reform comes on the heels of Ethiopian authorities securing a half-billion long-term loan from the World Bank, part of a 1.5 billion dollar financial package from the International Development Association (IDA). Approved by Parliament less than two months ago, the Finance Minister stated that the loan would support social safety nets for vulnerable households, including the civil service.

However, many in the civil service, particularly those in mid-range salary brackets, express dissatisfaction with the anticipated increases.