The king fired his civil service minister and put him under investigation for abuse of office.
He also named his son Prince Khalid as new ambassador to the US.
His decrees saw a new national security centre created under the Royal Court.
The king also ordered two months extra salary be paid to frontline military personnel taking part in Saudi-led operations in Yemen.
Prince Khalid, the new ambassador in Washington, is a fighter pilot who has trained in the US and carried out air strikes against the so-called Islamic State (IS) group in Syria.
The decree said the pay cuts for ministers and government employees - the first in the country, where about two-thirds of working Saudis are employed in the public sector - had been in response to falling oil prices, which sank to a low of $28 (£21) a barrel last January.
Public sector wages accounted for almost half of government spending in 2015
The price of oil has since risen to about $52 a barrel and ministers said budgetary performance had been better than expected in the first quarter of this year.
Under the cuts, ministers had their salaries reduced by 20% and housing and car allowances for members of the advisory Shura Council were cut by 15%.
Wage increases for lower-ranking civil servants were suspended, and overtime payments and annual leave capped.
Salaries and allowances accounted for 45% of government spending in 2015, or $128bn (£99bn), and contributed to a record budget deficit of $98bn.