Ethiopia to Raise Civil Servant Salaries by Up to 80% Starting September











Addis Ababa, August 18, 2025 – The Federal Government has announced additional salary adjustments for civil servants beginning in September, expanding its ongoing effort to ease cost-of-living pressures and align wages with the country’s broader reform agenda.

New Salary Structure

According to the Federal Civil Service Commission, the upcoming adjustments will increase civil service pay across all levels:

Minimum salary: raised from Birr 4,760 to Birr 6,000

Maximum salary: increased from Birr 21,492 to Birr 39,000

Entry-level salary for degree graduates: revised from Birr 6,940 to Birr 11,500

Salaries across other public service roles will also be adjusted

The revisions are expected to raise the government’s annual wage bill to 560 billion birr, an increase of 160 billion birr compared to the previous year.

Reform Context

The announcement is part of Ethiopia’s new economic development vision, which prioritizes inclusive growth, debt reduction, and improved revenue mobilization.

Civil servants—who make up one of the largest groups of fixed-income earners in the country—have long argued that pay levels have not kept pace with rising inflation and the cost of living. Officials acknowledged this disparity, noting that while incomes for farmers, pastoralists, and private-sector workers have grown, civil service wages have remained stagnant.

At present, government salaries account for roughly 30–32% of total public expenditure, underscoring the significant fiscal burden of wage reforms.

Previous Measures

This is not the first major wage intervention in recent years:

In 2017, the government allocated 91 billion birr to increase salaries for lower-income civil servants despite fiscal pressures.

Amendments to the Fixed Income Tax Proclamation (1994) raised the tax-free income threshold from Birr 600 to Birr 2,000, providing some relief to salaried employees.

Complementary Measures

Officials have stressed that salary adjustments are being paired with additional reforms aimed at improving the overall welfare of civil servants. These include:

Housing programs targeted at public employees

Expanded health insurance coverage

Market monitoring mechanisms to discourage unjustified price increases linked to wage changes

Authorities have indicated that businesses found exploiting salary revisions through artificial price hikes could face regulatory action.

Fiscal Outlook and Revenue Pressures

Ethiopia is pursuing a broader fiscal reform agenda designed to strengthen domestic revenue collection. The government has set an ambitious one trillion birr tax revenue target for this fiscal year—nearly four times the amount collected in 2020.

To support this goal, a Domestic Revenue Mobilization Task Force has been established to improve compliance, while a series of tax policy reforms, including advance income tax payments for large taxpayers, have been introduced to stabilize government cash flow.

Officials have stated that sustainable wage growth will depend on the success of these measures. They aim to increase the country’s tax-to-GDP ratio by one percentage point annually, with a medium-term goal of reaching 11% within four years.

Broader Significance

The salary adjustment is expected to have multiple effects:

Relief for civil servants struggling with inflation and rising living costs

Increased government expenditure, putting additional pressure on fiscal balances

Potential inflationary ripple effects, depending on how markets respond to higher wages

Observers note that while the pay rise provides immediate relief for public employees, its long-term success will depend on the government’s ability to balance wage spending with broader revenue and economic reforms.

Reporter’s Note: The upcoming civil service pay rise is part of a wider fiscal and economic reform package. While it addresses mounting cost-of-living concerns among public employees, it also adds to Ethiopia’s fiscal pressures at a time when the government is seeking to expand its tax base and reduce debt.