EDITORIAL - Fiscal discipline

Way back in 2001, Gloria Macapagal-Arroyo had ordered cuts in the salaries and benefits received by officials of government-owned and controlled corporations and government financial institutions. Arroyo reiterated her order in 2004 amid government austerity measures.

In 2010, President Aquino issued Executive Order No. 7, suspending the compensation package for officials of GOCCs and GFIs as the new government studied the rationalization of the pay scheme. The result of the study was the enactment of Republic Act 10149 or the GOCC Governance Act of 2011, which seeks to promote fiscal discipline among GOCCs and GFIs and ensure their financial viability. Proponents of RA 10149 also said the law aimed to stop the practice of using appointments to state corporations as political rewards, regardless of fitness for the job.

RA 10149, however, did not put an end to controversies surrounding compensation for GOCC and GFI executives. Last July, trustees of the Metropolitan Waterworks and Sewerage System were criticized when it was learned that they had awarded themselves bonuses ranging from P345,600 to P504,900 each.

The Social Security System is currently under fire following reports that at least eight of its officials received bonuses ranging from P968,000 to P1.4 million last year. The report came out as the SSS announced plans to increase its members’ contributions by 0.6 percent by January 2014.

Defenders of the perks for officials of GOCCs and GFIs have argued that if the nation wants state firms to be financially healthy, the management skills required call for compensation that is competitive with those in the private sector. Criticism of undeserved and “unconscionable” bonuses, however, arises from seeing the positions treated as political rewards for individuals perceived to lack the qualifications for the job. This is on top of the fact that the entire Philippine bureaucracy makes do with modest pay. Do officials of state firms deserve special treatment?

The daang matuwid administration should answer that question in its effort to promote fiscal discipline in GOCCs and GFIs. The administration can start with a review of bonuses in the state firms in 2013, followed by a scrutiny of plans for Christmas or yearend bonuses for this year.