MANILA, Philippines — Employees in state-run corporations by next year would enjoy higher salaries on top of performance-based incentives under a system that would cost the government P6 billion a year.
Cesar L. Villanueva, chairman of the Governance Commission for Government Owned or Controlled Corporations (GCG), told reporters last week that they have been expecting President Aquino to come up, before the resumption of Congress’ sessions next month, with an executive order (EO) putting in place the Compensation and Position Classification System (CPCS) for GOCC workers.
The CPCS will “standardize GOCC compensation and make it competitive with the private sector doing comparable work in order to attract, retain and motivate a corps of competent civil servants,” the GCG explained.
“Through the CPCS, all GOCCs under GCG’s jurisdiction shall follow a standard compensation framework streamlining the number of allowances and ensuring that the basic salary represents the bulk of an officer or employee’s compensation for better transparency,” it had also said.
Villanueva said GOCC employees would have salaries equivalent to about 70 percent of their counterparts in the private sector under the CPCS. “We hope to replicate the Singapore model where the best and the brightest opt to work in GOCCs.”
Subsequent salary hikes would be based on performance, as well as on the capability of GOCCs to pay higher salaries, the GCG official said.
“Salary increases will be based on merit… There will be no budgetary implication—GOCCs will move into it [CPCS] when sustainable. It does not affect the national budget since it would be sourced from internally generated revenues of GOCCs,” Villanueva explained.
While the proposal to hike GOCC employees’ salaries had been pitched to the Office of the President as early as two years ago, it was then put on the back burner as some quarters raised an issue why workers in state-run firms would enjoy higher salaries while those employed by the national government would not, Villanueva disclosed.
The proposal was based on a study conducted by global professional services provider Towers Watson, which suggested additional salaries totaling P6 billion across GOCCs each year.
In a speech last May, Finance Secretary Cesar V. Purisima said that in the past, GOCCs were “underperforming,” citing that returns to the P6 trillion in total assets being managed by state firms had been “dismal.”
But times have changed, and of late, the sector’s performance has improved due to the promotion of meritocracy under the GOCC Governance Act of 2011, Purisima said.
“We have started seeing better returns. The average return in 2014 was about 12 percent, 5-percentage points higher than when [the Aquino administration] started,” the Finance chief had pointed out.
Hence, it is high time for GOCC employees to enjoy higher pay, according to Purisima. “The initial estimate [of the Towers Watson study] is that there will be an additional of P6 billion in salaries for GOCCs. But when you compare that to the P6 trillion they oversee, that’s a small number, especially if we have better returns,” he had said, citing that President Aquino had ordered a review to “maximize the benefits” of GOCC workers amid increasing amounts being remitted to government coffers.
This time, the hike in GOCCs workers’ pay will come alongside the proposed increases in government salaries.
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 being endorsed by the President.
Under the proposed 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.
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, according to Budget Secretary Florencio “Butch” Abad.
Congress failed to pass the proposed Salary Standardization Law of 2015 before the Christmas break. The House of Representatives has yet to ratify it as the Senate has also yet to pass it on third reading. Congress aims to pass the bill on final reading when it resumes from its break on Jan. 19 next year.
Once passed into law, the initial tranche of salary adjustment would take effect on Jan. 1, 2016, Abad had said. The three succeeding tranches would be implemented every Jan. 1 of the subsequent years.
Abad had 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, the Budget chief had said.
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.
Abad had said these proposed adjustments were based on a study conducted by the Department of Budget and Management (DBM) in cooperation also with Towers Watson as its private sector consultant.
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 had 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 had noted that “majority of employees will enjoy a higher take home pay” once the Salary Standardization Law of 2015 is implemented.
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