Aquino backs across-the-board pay hike for government workers

Philippine President Benigno Aquino III AP FILE PHOTO

MANILA, Philippines — The over 1.5 million workers in government—from the President down to minimum salary earners—starting next year could enjoy higher pay under a proposed bill endorsed by President Benigno Aquino III to Congress on Monday.

Under the proposed bill titled “Salary Standardization Law of 2015,” the salary of the next Philippine president would more than triple to P388,096 a month by 2019 from P120,000 per month at present.

However, President Aquino as well as Vice President Jejomar Binay would no longer receive higher salaries, as the Constitution stated that “no increase in compensation shall take effect until after the expiration of the term of the incumbent during which such increase by approved” for the two highest posts in the land.

According to Budget Secretary Florencio Abad noted in a press conference, the current monthly salary of the President is just at the same level as that being earned by an operations manager of a consumer manufacturing company, an information technology manager of a business process outsourcing firm, or a project manager of a technology company.

At the adjusted P388,000 by 2019, the President’s pay would be comparable to those of a senior vice president of a financial services company, a business unit head of a consumer manufacturing firm, or an operations head of a pharmaceuticals company, Abad said.

In the case of Cabinet secretaries, the compensation adjustment, once enacted into law, would take effect in July next year. For legislators, the pay hike would be applicable after the expiration of the full term of all the members of the Senate and the House of Representatives approving such increase, under the Constitution.

As for the minimum basic salary or Salary Grade 1, the proposed law calls for an increase to a mere P11,068 a month by 2019 from just P9,000 per month at present.

Under the bill, salaries would be adjusted over the next four years beginning 2016. It would cost the government a total of P226 billion. Both houses of Congress have already committed to pass this bill by Dec. 19, Abad said.

Once passed into law, the initial tranche of salary adjustment would take effect on Jan. 1, 2016, Abad said. The three succeeding tranches would be implemented every Jan. 1 of the subsequent years.

Abad said these adjustments were benchmarked with “market” rates or the pay being received by counterparts in the private sector. At present, the amounts being paid to government employees are equivalent to only 55 percent of market rates, according to Abad.

The additional amounts would come from basic salary increases, a 14th-month pay to be distributed every midyear, as well as an enhanced performance-based bonus. According to the DBM, the pay hike across all salary grades averages 45 percent, equivalent to 84 percent of private sector compensation levels.

“The lowest salary grade, Salary Grade 1, will be about 154 percent of the market, while the highest, Salary Grade 33, which is the President, will be about 70 percent of the market,” Abad noted.

Abad said these proposed adjustments were based on a study conducted by the Department of Budget and Management (DBM) in cooperation with private sector consultant Towers Watson.

The study, completed last July, was “mandated by the Joint Resolution No. 4 of Congress in 2009, which provided for a review of the compensation and position classification system after three years from the last year of the adjustment, which was Jun. 1, 2012, to determine the competitiveness of government pay in relation to the private sector and the compensation strategy to bring government pay closer to market rates,” Abad explained.

According to the DBM, “the structure of the adjustment should temper the cost of benefits, such as Government Service Insurance System premiums and PhilHealth contributions, and allow for higher take home pay, especially for those in the lower salary grades.”

Also, under the law signed by President Aquino early this year that raised the tax-exemption cap on bonuses to P82,000, the DBM noted that “majority of employees will enjoy a higher take home pay” once the Salary Standardization Law of 2015 is implemented.

The salary adjustments to be implemented next year were already factored into the P3.002-trillion proposed 2016 national budget, Abad said. For the succeeding years, the budget secretary said the increases in hiring by the government would be “negligible,” hence the rise in expenditures for personnel services would be slower than the annual budget growth.

With higher salaries, the government would be able to keep its workers amid more intense competition with the private sector due to a booming economy, Abad said.  SFM