A proposed law seeking the standardization of state workers’ salaries will raise the compensation of the 1.53 million government personnel by up to 45 percent.
The salary hike will be implemented in tranches in four years.
Budget Secretary Florencio Abad said once the bill is approved, the adjustment will begin in January 2016. It 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,” Abad said.
The Budget chief explained that for every 10 government employees, five will get a higher take home pay under the proposed law due to new tax-free bonuses.
“Under the SSL 2015, five in every 10 civilian personnel will receive their full mid-year bonus and their full PBB because these additional benefits will be tax-free. And eight in every 10 civilian personnel will receive their full mid-year bonus tax-free,” he said.
“This is because under RA 10653, gross benefits such as the 13th month pay and other benefits not exceeding P82,000 shall be tax exempt. This means the majority of employees will enjoy a higher take-home pay as a result of adjustments under SSL 2015,” Abad explained.
According to him, 52 percent of all authorized civilian positions or 606,454 employees are Salary Grades (SG) 1-11. These employees will receive not only their existing tax-exempt 13th month pay, PERA, cash gift, and Performance-Enhanced Incentive (PEI), they will also get their full mid-year bonus and PBB tax-free.
Moreover, employees ranked SG 12 to 16 numbering 364,489 or 31 percent of all authorized civilian positions, who receive their existing tax-exempt 13th month pay, cash gift, PERA, and PEI will get their full mid-year bonus tax-free.
Abad brushed off critics’ claims about the possible inflationary impact of the SSL 2015, pointing out that government workers number only 1.53 million, which is only 3.4 percent of the total labor force of the Philippines
“SSL 2015 is almost inflation-neutral. We also estimate that the impact of GDP growth is positive, adding 0.022 percent to growth in 2016, 0.05 percent in 2017, and 0.09 percent in 2018,” he explained.
Though the proposed SSL will be effective on January 1, 2016, current high officials will not enjoy its benefits as the compensation adjustment for the salaries of the President, the Vice-President, and the members of Congress and the Cabinet will take effect only on July 1, 2016.
According to Section 10 of Article VI of the 1987 Philippine Constitution, “No increase in said compensation shall take effect until after the expiration of the full term of all the Members of the Senate and the House of Representatives approving such increase.” On the other hand, Section 6 of Article VII states: “No increase in said compensation shall take effect until after the expiration of the term of the incumbent during which such increase was approved.”