Proposed pay hike for
public sector to up salary by 45%
MANILA, Nov. 10 -- The Department of Budget and Management (DBM)
announced yesterday plans for a new round of compensation adjustments that
would raise the basic salaries and benefits of the 1.3 million government
workers by up to 45 percent. The proposed pay hike shall be implemented in
four tranches over four years starting January 2016 and, upon full
implementation, will bring the compensation of all government workers to at
least 70 percent of market rate.
The proposed compensation plan is composed of across the board salary
increase plus a mid-year bonus equivalent to one month basic salary and the
new Performance-based Bonus (PBB) as an added bonus contingent on
performance. The mid-year bonus, in addition to the present year-end bonus
or 13th month pay, will account for an 8 percent increase in annual salary.
The PBB is equivalent to 1 to 2 months basic salary or an 8 to 16 percent
increase depending on the position.
“It is about time for another round of increase. Joint Resolution No. 4,
which mandates the review of compensation every three years, was fully
implemented in 2012. From then until 2015, the purchasing power of the pay
of government workers has been eroded due to inflation,” Budget Secretary
Florencio “Butch” Abad said in a press conference.
The review of the public sector compensation and benefits is mandated by
Joint Resolution No. 4, or Salary Standardization 3 (SSL 3), which states
that “a periodic review of the government’s Compensation and Position
Classification System shall be conducted every three years.” This is to take
into account the competitiveness of salaries relative to the private sector,
adjust salaries for the inflation rate and consider changes in skills,
expertise, and competency requirements of the bureaucracy.
The budget chief said that the proposed salary adjustments or SSL 2015 shall
be implemented based on the following principles: fair and reasonable
compensation based on fiscal realities; competitiveness of pay in relation
to the private sector; strengthening the link between pay and performance by
enhancing the performance-based incentive system; and tempering the cost
impact of the compensation increase to allow for higher take home pay.
“We have a solid basis for this policy recommendation. We have a study to
compare the competitiveness of government pay in relation to the private
sector. And based on this study we crafted a compensation adjustment
strategy to bring government pay closer to market rates,” he said.
SSL 3 is 45% below market
Abad said the study found that while the pay of sub-professional workers in
government matches or even exceeds those of their private sector
counterparts, professional workers get as low as 41 percent of market rates
as they move up the ladder. Middle managers, comprised of directors, only
get more or less a third of what their counterparts in the private sector
get; while executives are paid only about a quarter to a third as much.
“Overall, government pay is 45 percent below market. SSL 2015 will further
enhance the market position of Salary Grades 1-7 since they will be at 4
percent to 54 percent above market. Salary Grades 8- to 17 will be
competitive to the market at 72 percent to 98 percent% of the market. Salary
Grades 18 to 24 will be at 70 percent of the market,” he said.
Higher salaries to help attract and retain technical staff, middle
“Higher salaries help attract and retain critical talent. We want to attract
the best and brightest managers and executives to join and stay in
government. More than a proposal for a salary increase, SSL 4 is an advocacy
to further improve government service. With competitive compensation, we
intend to bolster the recruitment of agencies that need to fill up vacancies
in senior technical and middle management positions,” Abad said.
He added that government agencies have been having difficulty in recruiting
and retaining senior technical staff/middle managers.
According to DBM data, the number of unfilled positions in government is
191,988 or 12.53 percent of total authorized positions. Agencies with the
highest number of unfilled positions include the Ombudsman, Commission on
Audit (COA), Department of Agriculture, (DA), Department of Environment and
Natural Resources (DENR), Department of Finance (DOF), Department of Health
(DOH), Department of the Interior and Local Government (DILG).
Salary Grades (SG) that are hard to fill are senior technical positions from
SG 21 to 25 where vacancies are between 26 to 41 percent of the total
authorized positions for the respective SGs. Among the positions that belong
to these SGs are senior accountants, lawyers, and division chiefs.
The proposed SSL 2015
Abad said the minimum salary (SG 1) shall be raised from P9,000 to P11,068
monthly. For higher position levels, (SGs 18-30), pay should reach 70
percent of market rates. This is to strike a balance between enhancing the
compensation of the senior professionals, managers and executives, and
keeping the additional personnel services cost within the government’s
“The plan is not to raise the basic salaries alone. We want government
compensation to be roughly comparable with the market. But raising basic
salaries will also entail an increase in mandatory contributions, such as
for GSIS and health insurance. This would consume part of the increase in
pay. To temper the cost impact of the compensation increase, as well as to
achieve the desired market positioning and also move towards a performance
culture, we have included two benefits on top of the basic salary and in
addition to the existing benefits. These are the mid-year bonus and the PBB.
Overall, these adjustments will give employees an average increase of 35
percent to 45 percent plus mid-year bonus; and the new PBB if they qualify,”
Total cost of SSL 2015
Implementing the SSL 2015 will cost around P225.8 billion in four years. For
the first tranche, the amount of P58 billion is included in the proposed
Of the total cost of P225.8 billion, only 3.9 percent will go to government
executives or those in salary grades 29 to 33. Sub-professionals will get
4.28 percent; Professionals 60.4 percent; Middle managers 8.26 percent; and
Military and Uniformed Personnel 23.16 percent.
Abad emphasized that considering the tax exemption provided under the law
for gross benefits not exceeding P82,000, the full mid-year bonus and the
full PBB shall, in effect, be tax-exempt for salary grades 1 to 11. And the
mid-year bonus will be tax-exempt for salary grades 12 to 16. This will make
for higher take home pay for the majority of government personnel.
President Aquino will not benefit from the increase
Abad said the plan is to implement the SSL 2015 effective January 1, 2016.
However, the constitution provides that incumbent Senators and members of
Congress approving compensation increases, as well as the President and
Vice-President, shall not benefit from the proposed compensation adjustment.
The implementation of the proposed compensation adjustment with respect to
these officials, including the regular members of the Cabinet, shall be
effective July 1, 2016. (DBM)