Gov’t pay hike delayed due to stalled budget

Government workers looking forward to a fatter paycheck on the first payday this new year will be disappointed as the scheduled salary increase has been delayed due to Congress’ failure to approve the proposed P3.8-trillion national budget for 2019.

Executive Order No. 201, which President Benigno Aquino III issued in 2016, granted government employees four tranches of salary increases starting that year until 2019.

The fourth increase was supposed to be included in this month’s salaries for civilian and uniformed personnel.

But Budget Secretary Benjamin Diokno on Wednesday said “the fourth tranche has to wait for the approval of the 2019 budget.”

Retroactive

Diokno nonetheless said the salary increase would be retroactively applied as soon as the 2019 funds were released.

Since Congress failed to pass the 2019 budget proposal before 2018 ended, the government will operate on a reenacted budget at the start of this year.

National government personnel services (salaries, wages, pension and retirement) as well as maintenance and other operating expenses (MOOE) for this year are thus based on 2018 levels.

Senators expect the 2019 national budget to be passed and signed into law by February, but Diokno said its implementation could start as late as March.

Based on documents on the proposed 2019 national budget, the government will allot P1.185 trillion for personnel expenses this year, up from P1.061 trillion last year.

Expenses for civilian personnel were programmed to be P749.9 billion, on top of the P312.7 billion for military and other uniformed personnel, among other expenses and benefits.

The budget proposal for 2019 stalled amid allegations of “pork barrel insertions” and kickbacks among lawmakers, who implicated Diokno in alleged conflict of interest involving several infrastructure projects.

Department of Budget and Management (DBM) estimates show that expenditures in 2019 will be cut by P219.8 billion under a reenacted budget.

In particular, disbursements for personnel services will be reduced by P54.4 billion; MOOE by P14.3 billion; subsidies by P28.3 billion; and capital outlays by P122.9 billion.

Slower growth

This reduction would lower gross domestic product (GDP) growth by 1.1 to 2.3 percentage points in 2019, according to the National Economic and Development Authority (Neda).

The government targets a 7 to 8 percent GDP growth for the whole year.

According to Neda, GDP growth would only be 4.7 to 5.9 percent this year if the national government operates under a reenacted budget.

In turn, an economic growth below 6 percent would lead to job losses and many Filipinos becoming poor.

“It is estimated that employment could be reduced by as much as 600,000 if the budget is reenacted in 2019,” the DBM said in December.

Among the sectors to be affected are construction, public administration and defense, wholesale and retail trade, land transport and education.

The DBM said between 200,000 and 400,000 people “will be pushed into poverty as a result of contraction [of the budget].”