Saudi Arabia's King Abdullah has ordered that all government employees be paid two months' wages and that students be granted a two-month payment, according to a royal decree read on Saudi television.
The king also set a minimum wage of 3,000 riyals ($800) a month for all Saudis.
Gulf leaders are struggling to hold back an internet-era generation of Arabs who appear less inclined to accept arguments appealing to religion and tradition to explain why ordinary citizens should be shut out of decision-making.
The world's biggest oil exporter has mostly avoided the wide unrest that toppled rulers in Egypt and Tunisia and spread to neighbouring Yemen, Bahrain and Oman.
Riyadh sent 1,000 troops to Bahrain this week to help contain pro-democracy protests led by majority Shia Muslims that the Sunni monarchy broke up by force on Wednesday.
The Sunni Islamic state fears the influence of non-Arab Shia power Iran, which complained to the United Nations about the crackdown in Bahrain.
The official Saudi Press Agency announced the king's speech yesterday. State media gave no details on the decrees or what the king would say.
Analysts and diplomats say the king could announce a much-anticipated cabinet reshuffle in a country where some ministers have been around for decades.
Reformers have been hoping for a move towards democracy such as new elections to municipal councils, or even elections to the Shura Council - an advisory body of appointees.
The kingdom has been slow to carry out reform promises in the conservative state since Abdullah came to power in 2005. Diplomats say the king faces opposition to political openings from some senior princes and clerics.
"I think it is larger than a cabinet reshuffle. A cabinet reshuffle doesn't require the king to give a speech. I think he will speak about a package of reforms that will include municipal elections," said a Saudi analyst who did not wish to be named.
The elderly king unveiled handouts worth an estimated $37 billion to ease social pressures on return last month from three months of medical treatment in the United States.
With more than $400 billion in foreign reserves, Riyadh is in a more comfortable position than other Arab countries to alleviate any social pressure such as high unemployment.
But pressure has been building up on the leadership with activists using petitions to demand a greater public say in a monarchy that has no elected parliament or political parties.
Saudi Arabia's minority Shi'ites complain of discrimination, saying they often struggle to get senior government jobs and benefits available to other citizens.
For nearly 60 years Saudi Arabia has been ruled by a single generation of sons of the state founder, Abdul-Aziz Ibn Saud.
The king is 87 and his crown prince Sultan, who also has health problems, is only a few years younger. Analysts say the royal family faces a difficult task in promoting princes from the next generation and balancing the family's major wings.