Case Analysis:

Management

Salary

Standardization

Law

of

Department

of

Budget

and

Case Study Profile Summary:

As the agency accountable for carrying out the Presidents responsibility of
preparing the budget, the DBM dates back its institutional history to its birth as the
Budget Commission on April 25, 1936 with the issuance of Executive Order No. 25
by Commonwealth President Manuel L. Quezon. Executive Order 292, or the
Revised Administrative Code of 1987, provided for major organizational subdivisions
of the OBM which has been converted into the Department of Budget and
Management. It likewise stipulated the Departments responsibilities (formulating
and implementing the National Budget and ensuring the efficient and sound
utilization of government resources to achieve the countrys development
objectives) which are still being followed to this day.
On August 21, 1989, Republic Act No. (RA) 6758, entitled "An Act Prescribing a
Revised Compensation and Position Classification System in the Government and
For Other Purposes," which is otherwise known as the Salary Standardization Law
(SSL), was enacted to implement the provisions of the Constitution mandating the
standardization of public sector pay structures in accordance with the principle of
equal pay for equal work. Among the best features of the law were a simplified
position classification structure, rationalized longevity and merit pay, simplified
salary scale, upgrading of salary and the grant of power to the executive power to
increase pay. R.A. 6758 rationalized the government compensation system and
improved the incentive structure within the bureaucracy.
According to DBM data as of November 2015, 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.
Key Issues:
1. Despite the improved incentive structure within the bureaucracy, there are
still 191, 988 unfilled positions in the government as of Nov. 2015.
2. Government agencies have been having difficulty in recruiting and retaining
senior technical staff/middle managers.
Past Initiatives to Respond the Issue:

In 1994, six years after the passage of R.A. 6758, Congress amended the law
through the passage of Joint Resolution No. 1, also known as SSL-2, which
recommended the further adjustment in the pay of government employees. The
joint resolution preserved the principles and structure prescribed under R.A. 6758
and substantially adopted the policies of the mother law, except for a selective
upgrading of the Salary Grade of positions (nurses, judges, among a few others).
The major feature of SSL-2, was the doubling of the basic pay for the lowest position
in the civil service. Higher level positions likewise increased but with smaller
percentage growth rates. The imposition of a maximum pay, on the highest Salary
Grade in the government tied the hands of the Executive Branch to institute a more
competitive pay for government personnel, given the resumption of the widening
differential of public and private sector pay after the first SSL.
To address the many issues previously issued and put government pay closer to
private sector pay (at least at the middle level positions), Joint Resolution No. 4
was passed by Congress on 17 June 2009. As in the past, the new law covers all
agencies of the national government, local governments and GOCCs.
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 governments 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 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.
Analysis of the Success and Failures of the Past Initiatives:
The Department of Budget and Management (DBM) on November 2015, announced
plans for a new round of compensation adjustments that would raise the basic
salaries and benefits of the 1.53 million government workers by up to 45
percent. The existing weaknesses of the current compensation and position
classification system the same weaknesses that was already addressed by the first
SSL. Among the major weaknesses include being non-competitive of public sector
pay. The private sector outpaces government pay, particularly from senior staff
positions up to supervisory and executive levels. There was substantial overlaps in
salaries between positions. This is highly unfair and leads to problems in the
relationships between superiors and subordinates. Moreover, the overlaps
effectively resulted in putting a premium on length of stay in a particular position
more than the assumption of bigger responsibilities and performance of more
complex work. The proliferation of Magna Carta benefited certain positions which
enjoy better benefits, apart from agencies exempt from the SSL. The unfairly liberal

interpretation of said Magna Carta laws has therefore created a very distorted pay
system.
Alternative Measures and Strategies:
SSL 2015 measure proposes a compensation adjustment strategy for 20162019 approved by President Benigno Aquino III. The basis for the proposed
compensation adjustment strategy is the Compensation and Benefits Study for
the Public Sector carried out by the Department of Budget and Management
(DBM). Essentially, SSL 2015 will increase the salaries and benefits of the 1.53
million government personnel by a weighted average of 45 percent and bring the
compensation of all government workers to at least 70 percent of market rate.
The Compensation and Benefits Study for the Public Sector is a survey carried out
by the DBM pursuant to its mandate to administer the compensation and position
classification system of the government under Presidential Decree No. 985 and
Republic Act No. 6758 or Salary Standardization Law I. The objectives of the Study
are two-fold: (1) to compare the competitiveness of government pay in relation to
the private sector; (2) to craft a compensation strategy to bring government pay
closer to market rates. As a result of this Study, the DBM developed a proposed
compensation adjustment strategy for 2016-2019.
Conclusion and Recommendation:
The cost of personnel services is typically a huge proportion of national or central
government budgets which is roughly one third of the national budget. Due to the
magnitude of this cost, the government has adopted a case-to-case policy on
compensation adjustments.
A competitive and fair pay structure is a major impetus to good fiscal governance.
Government compensation should enable employees to earn a decent pay
commensurate to their work. As such, government personnel must be so treated, by
among others, being given reasonable pay scales. It is therefore important that a
competitive, fair and decent pay scale be supported and continuously implemented
in the public sector.
The new round of compensation adjustments should 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. More than a proposal for a salary increase, SSL 4
advocate further improvement of government service. With competitive
compensation, they should intend to bolster the recruitment of agencies that need
to fill up vacancies in senior technical and middle management positions.

References:
http://www.dbm.gov.ph/?p=14211
http://cnnphilippines.com/news/2015/08/13/Government-workers-proposed-payhike-in-2016-Ralph-Recto.html
http://sc.judiciary.gov.ph/jurisprudence/2005/aug2005/157279.htm
http://incitegov.org/wp-content/uploads/2011/05/INCITEGov-SSL.pdf
http://www.lawphil.net/judjuris/juri2014/apr2014/gr_195687_2014.html
DBM Compensation Plan Manual