Palace to file bill increasing pay scale of gov’t personnel

Malacanang is expected to file a bill to increase the salary of government employees and update the Salary Standardization Law.

In a statement on Monday, Budget Secretary Florencio “Butch” Abad said the proposed bill seeks a four-year P226 billion compensation hike for the government’s 1.53 million civilian and military and uniformed personnel.

The compensation package is composed of a salary increase, a mid-year 14th month pay, and an enhanced performance-based bonus (PBB) system, Abad said.

He added that the salary hike would increase the basic Salary Grade 1 from P9,000 to P11,068 a month.

The bill seeks to increase the basic salary of covered employees by an average of 27 percent. The 14th month pay will increase compensation by eight percent.

Meanwhile, the enhanced PBB is equivalent to one to two months’ salary or an average 10 percent 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 said.

The bill also seeks to bridge the gap between the pay of employees in the public sector with their counterparts in the private sector.

Abad said under the bill, the lowest salary grade, Salary Grade 1, will be raised to about 154 percent of the market, while the highest salary grade belonging to the President will be about 70 percent of the market.

Government compensation on the average is estimated to increase by 45 percent and should be around 84 percent of private sector pay at the end of the four tranches, Abad said. The average government pay now is 55 percent of the market rate.

Abad said under the bill, the new compensation level for all salary grades will be at least 70 percent of the market, there will be no salary overlaps, and the link between pay and performance will be strengthened.

“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,” Abad added.

Abad said the bill would only increase the salaries of the President and Vice President upon the expiration of their terms. This means President Benigno Aquino III and Vice President Jejomar Binay would not benefit from the salary hike.

Abad also said the current Cabinet secretaries were not included in the hike as delicadeza.

He said the salary hike for members of the House of Representatives and Senate, and of the Cabinet, would only take place on July 1, 2016, or after the expiration of the incumbents’ terms.

Because of the enactment of Republic Act 10653, which raised the tax exemption cap to P82,000, the 14th month pay and PBB will be tax-exempt for employees belonging to Salary Grades 1-11  who only receive the tax-exempt 13th month pay, the cash gift and the productivity enhancement incentive (PEI).

Meanwhile, only the 14th month pay will be tax-exempt for employees under Salary Grade 12-16 who receive the existing tax-exempt 13th month pay, cash gift and PEI.

The first tranche of the pay hike will take effect on Jan. 1, 2016, and thereafter until the final tranche in 2019.