Abstract
This paper shows that multiple equilibria are possible in the government service labor market. Broadly, these
equilibria may be classified into two categories, namely “good” and “bad.” Unfortunately, it seems that Bangladesh
has fallen into and become stuck with the “bad” equilibrium. One main reason for this outcome has been the rigidity
of the government pay scale in presence of private and international pay scales. This bad equilibrium is harming the
country’s growth prospects in many different ways. Bangladesh needs to put an end to this “bad” equilibrium and
move to a “good” equilibrium that can safeguard her national interests in face of private and international pressures
and can enhance growth.