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What a hire in Pakistan actually costs

· 3 min read

Gross salary is the number most Pakistani employers budget against, and it is the wrong one. The difference between the salary you agree and the cost you carry is predictable, but it is rarely in the offer approval — which is how a hire lands over budget in month one.

Start with the salary, then add four things

For a permanent employee in Pakistan, the employer-side additions are EOBI, provincial social security, gratuity accrual, and whatever allowance structure you have agreed. None is large on its own. Together they are the gap between your budget and your actual cost.

EOBI

The Employees’ Old-Age Benefits Institution applies to establishments with five or more workers. The employer contributes 5% and the employee 1%.

The part that surprises people: the contribution is calculated on the federal minimum wage, not the employee’s actual salary. The minimum wage was raised to PKR 40,000 a month in the 2026-27 federal budget, so the employer contribution works out at roughly PKR 2,000 per worker per month — the same for a support hire as for a senior engineer.

That makes EOBI a rounding error on a senior salary and a real percentage on a junior one. Budget it per head, not as a percentage of payroll.

Provincial social security

Social security is provincial, not federal — SESSI in Sindh, PESSI in Punjab, and equivalents elsewhere. The employer contributes a percentage of wages up to a provincial ceiling, and both the rate and the ceiling are set province by province and revised periodically.

Because these vary and change, we do not publish a single rate. Confirm the current figure with the institution in the province where the employee will actually work — not where your head office is registered.

Gratuity

Under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, a permanent worker with at least six months’ service is entitled to 30 days’ wages for each completed year of service, unless you operate an approved provident fund or a scheme that is more favourable.

Thirty days a year is, roughly, another 8% of salary accruing quietly from the day someone starts. It is not a monthly cash cost, which is exactly why it gets left out of the hiring business case and then appears as a lump sum at exit.

Allowances

Fuel, medical, mobile and any conveyance allowance sit on top, and in Pakistan they are often the difference between an offer being accepted and being used as leverage elsewhere. Decide them before you go to market, not during the negotiation.

A worked example

A mid-level developer on PKR 250,000 a month:

  • Salary — PKR 250,000
  • EOBI employer share — about PKR 2,000
  • Provincial social security — per your province’s current rate and ceiling
  • Gratuity accrual — about PKR 20,800 a month set aside (30 days a year)
  • Allowances — whatever you have agreed

Before allowances and social security, you are already carrying close to PKR 273,000 against a PKR 250,000 salary. Nothing here is unusual or avoidable. It just needs to be in the number you approve.

The cost that is not on this list

The largest avoidable cost in Pakistani hiring is not statutory — it is the offer that falls through at notice. One and three-month notice periods are normal for mid and senior roles, and counter-offers are common inside that window. A hire lost in week six means restarting a search you have already paid for in management time.

Related

Sources

Sources checked on 20 October 2026. Rates and rules change; confirm current requirements with the relevant authority or your adviser.

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