Aquino signs government salary standardization

MANILA, Philippines (UPDATED) — President Benigno Aquino III on Friday signed the executive order that raises the salary of government employees.

The signing of Executive Order no. 201 came two weeks after Congress adjourned without passing the proposed wage standardization law,  which would have implemented a four-year salary increase program for government workers.

The Salary Standardization Law (SSL4) increases the salary of about 1.6 million government workers by an average of 27 percent.

Communications Secretary Herminio Coloma Jr. said that the executive order provides for the first of four parts in the proposed SSL4 that failed to pass Congress.

Lawmakers failed to reach an agreement over a proposal by the Senate to index the pension of retired military and uniformed personnel to the salary increases of their active duty counterparts. The Budget department previously said there are no funds in this year’s budget for the indexation, which is expected to bloat the government’s pension requirements.

The House of Representatives’ version of the measure, meanwhile, did not hike the retired uniformed personnel’s pension.

House Majority Leader Neptali Gonzales II earlier said that the SSL4 sets a four-year government-wide salary increase program which will cost taxpayers an estimated P850 billion.

In the EO, Aquino said the salary adjustment would ensure that the compensation structure of government personnel is comparable with the prevailing rates in the private sector.

The new scheme will raise the minimum salary for Salary Grade 1 from P9,000 to P11,068. Aquino said the adjustment would also maximize the net take-home pay of government through the inclusion of additional benefits.

Budget Secretary Florencio Abad said the EO would implement compensation adjustment for this year as an interim measure to implement the first tranche of the proposed SSL. He said the full year requirement for the salary standardization has already been provided in the national budget.

The modified salary schedule for civilian personnel will be implemented in four tranches. The first tranche will be applied retroactively effective Jan.1, 2016. The succeeding tranches will be implemented every year until 2019.

The EO also grants civilian government personnel a mid-year bonus equivalent to one month’s basic salary, and the productivity enhancement incentive worth P5,000.

The salary adjustment, however, will not cover workers of government-owned and controlled corporations (GOCCs) that are governed by their respective charters.

Coloma said salary adjustments for employees of state-run firms are provided for in the GOCC Governance Act of 2011.

When asked if GOCC employees can also expect salary adjustments, Coloma said: “Let us just wait for the statement of the GCG (Governance Commission for GOCCs). It’s covered by separate study.”

Abad said GOCCs not covered by the GCG may implement compensation adjustments charged to their corporate funds.

Individuals whose services are engaged through job orders, contracts of service, consultancy contracts and service contracts with no employer-employee relationships will not benefit from the salary hike.

Military and uniformed personnel, meanwhile will not enjoy increase in their basic salary but will be given higher hazard pay, a provisional allowance and officers’ allowance.

Increasing the basic pay of active soldiers and uniformed personnel would also raise the pension of retired ones because of the law on indexation. Officials have previously called for pension reforms to reduce the funding requirements and avert a fiscal crisis.

“These two new allowances will approximate the additional remuneration had base pay been increased. The amounts of these allowances are also based on the proposed increases in base pay under the SSL 2015 bill,” Abad said.

“This is an interim measure until such time that a pension reform measure is passed in Congress that will mitigate the impact of pension indexation,” he added.

The monthly hazard pay for soldiers will be raised from P240 to P390 this year, P540 next year, P690 in 2018 and P840 in 2019. The officers’ allowance, meanwhile, will be given to those with the rank of captain up to four-star general and their equivalents. The allowance will range from P1,000 to P9,000 in the first tranche, P3,000 to 18,000 in the second tranche, P4,500 to P25,000 in the third tranche and P7,000 to P35,000 in the fourth tranche.

“LGUs (local government units) may also implement the compensation adjustments subject to the Personnel Services limitation under the law,” Abad said.

Compensation adjustments for the president, the vice president, and members of Congress will only take effect after the terms of the incumbent officials expire.

“We trust that Congress will pass the SSL when it resumes so that the proposed compensation adjustments to be implemented in four tranches over four years will be permanent,” Abad said.

“With its passage, we will be able to achieve the desired outcome of the proposed SSL, which is to bring the compensation of all government workers to at least 70 percent of the market rate,” he added.

Aquino signed the executive order after arriving from his working visit in the United States.

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