Aquino pushes bill to raise gov’t workers’ salaries

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Aquino pushes bill to raise gov’t workers’ salaries
For covered employees, the compensation package includes a salary increase, a mid-year 14th month pay, and an 'enhanced performance-based bonus' system

MANILA, Philippines – Basic salaries of government employees are set to increase by an average of 27% should a bill endorsed by President Benigno Aquino III become a law.

The Department of Budget and Management (DBM) announced that Aquino endorsed to Congress on Monday, November 9, the proposed “Salary Standardization Law of 2015” (SSL 2015), a measure that would mandate “a 4-year P226-billion compensation increase for the national government’s 1.53 million civilian and military and uniformed personnel.”

Budget Secretary Florencio Abad in a statement said the compensation package for government employees includes the following:

  • a salary increase; 
  • a mid-year 14th month pay; 
  • an enhanced performance-based bonus (PBB) system.

“The bill seeks to increase the basic salary of covered employees on the average by 27%, while the 14th month pay will further raise compensation by 8%. The enhanced PBB is equivalent to 1 to 2 months’ salary or an average 10% increase in salary. Government personnel who play a greater role and carry a heavier responsibility in improving government performance, will receive a higher bonus,” Abad added.

After 4 tranches, Abad said, government pay “on a weighted average basis” is seen to increase by 45% or be around 84% of private sector pay. Salary Grade would will be 154% of the mark while Salary Grade 33, the highest, which is received by the President, will take up 70% of the market.

The DBM said current government pay, on average, is only 55% of market rates.

‘Compensation competitiveness’

Abad explained the adjustment of government salaries is according to the Joint Resolution No 4 of Congress of 2009, “which provided for a review of the compensation and position classification system after 3 years from the last year of the adjustment (which was June 1, 2012).”

It’s a move to measure “the competitiveness of government pay in relation to the private sector” and “the compensation strategy to bring government pay closer to market rates.” Human resource consulting firm Towers Watson was tapped by the DBM to study the proposal, which was completed in July 2015.

Abad explained the guidelines of their proposed compensation adjustment:

  1. The minimum basic salary – Salary Grade 1 – shall be raised from P9,000 to P11,068 a month;
  2. To attract and retain competent and committed personnel, the new compensation level for all salary grades shall be at least 70% of the market;
  3. To recognize differences in duties and responsibilities, there shall be no salary overlaps; 
  4. The link between pay and performance shall be strengthened, especially for those in the higher salary grades; 
  5. The structure of the adjustment should temper the cost of benefits (i.e. GSIS premiums and PhilHealth contributions) and allow for higher take-home pay, especially for those in the lower salary grades

The DBM added in its release: “As a consequence of RA 10653, which raised the amount of benefits exempted from tax to P82,000, for majority of civilian employees, those belonging to Salary Grades 1-11, and who are only receiving the existing tax-exempt 13th month pay, the cash gift, and the productivity enhancement incentive (PEI), their full 14th month pay and full PBB will also be exempt from tax. For those belonging to Salary Grades 12-16, who also are only receiving the existing tax-exempt 13th month pay, cash gift, and PEI, only their full 14th month pay will be exempt from tax.”

The first cycle of the adjustment is set to take effect on January 1, 2016, with the subsequent 3 tranches taking effect every succeeding January 1 until 2019.

But sitting government officials, particularly the elected ones, will not benefit from the proposed measure. Under the Constitution, increases to the President and Vice President’s salaries will only take effect after the incumbent’s term expires. The same applies to members of Congress.

Aquino’s Cabinet members don’t stand to benefit either since the adjustment for regular Cabinet members will only take effect on July 1, 2016, or after Aquino’s term ends. –

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