EO 7 suspends GOCC perks

MANILA, Philippines – President Aquino issued yesterday Executive Order 7 suspending the allowances, bonuses and incentives of directors and trustees of government-owned and controlled corporations (COCCs) and government financial institutions (GFIs) for more than three months or until Dec. 1, pending the issuance of new policy and guidelines on their compensation.

EO 7, which seeks to rationalize the compensation and position classification system in GOCCs and GFIs, also imposed a moratorium on increases in the rates of salaries and the grant of new increases in the allowances, incentives and other benefits for all those who are not covered by the Salary Standardization Law, until specifically authorized by the President.

Budget Secretary Florencio Abad said the administration would try to finish the new policy and guidelines that would put a cap on the salaries and privileges of those in GOCCs and GFIs before Christmas, when he was asked if those affected by the EO would no longer have Christmas bonus and other perks.

On Friday, Abad said the suspension of allowances, bonuses and other incentives would only be for two months, explaining that it was reasonable time for the economic managers to determine the proper compensation and perks for officials and board members of GOCCs and GFIs.

The EO also created a Task Force on Corporate Compensation that would review all remuneration granted to members of the board of directors/trustees, officers and rank-and-file employees as well as discretionary funds of GOCCs and GFIs.

The task force will be composed of officials of the Office of the President as chair and the Department of Budget and Management, Department of Finance and the Civil Service Commission as members.

“Transparency, accountability and prudence in government spending are among the core governance policies being adopted by this administration. While (GOCCs) and (GFIs), by nature of their operations, are accorded greater flexibility to function properly and efficiently under a market environment, such flexibility shall nevertheless be consistent with the precept of public accountability,” the EO read.

“There is a need to strengthen the supervision over the compensation levels of GOCCs and GFIs, in order to control the grant of excessive salaries, allowances, incentives and other benefits,” it added.

Only reasonable per diem will be given to the members of the board of directors/trustees.

The task force will have to prepare an updated inventory of the salaries, allowances, incentives and other benefits, under both direct and indirect compensation, given to all members of the board of directors/trustees, officers and rank-and-file employees, whether covered by or exempted from RA 6758, including those received from subsidiaries and private corporations, if any, as well as discretionary funds; categorize all remuneration granted to them; and formulate and recommend measures to rationalize the compensation system and the use of discretionary funds in specific GOCCs and GFIs, including putting a cap on total compensation.

The task force shall submit a report on its findings and recommendations to the President within 90 days from issuance of the order.

The GOCCs and GFIs were ordered to submit all pertinent documents regarding the matter.

The EO cited that under Section 9 of the Joint Resolution No. 4 of the Senate and the House of Representatives passed in 2009, agencies exempted from Republic Act 6758 or the Compensation and Position Classification Act of 1989, as amended, “shall observe the policies, parameters and guidelines governing position classification, salary rates, categories and rates of allowances, benefits and incentives prescribed by the President.”

Under the Joint Resolution, all government personnel shall be paid just and equitable compensation in accordance with the principle of equal pay and value and that their compensation shall be generally comparable with those in the private sector doing comparable work in order to attract, retain and motivate a corps of competent civil servants.

The compensation for government officials shall also be standardized and rationalized to create an enabling environment that will promote social justice, integrity, efficiency, productivity, accountability and excellence in the civil service and that a performance-based incentive scheme which integrates personnel and organizational performance shall be established to reward exemplary civil servants and well-performing institutions, the EO read citing the resolution.

It added that a periodic review of the compensation and position classification system should be conducted, taking into account the changes in skills and competency requirements and the possible erosion in the purchasing power due to inflation and other factors.

“The compensation for government personnel shall be kept fair and reasonable in recognition of fiscal realities and the personal services cost shall be maintained at a reasonable proportion of overall expenditures,” the EO stated.

Based on the EO, all remuneration granted to members of the board of directors/trustees, officers and rank-and-file employees of GOCCs and GFIs will be categorized in accordance with the Total Compensation Framework established under the Joint Resolution to include: basic salaries, plus step increments; standard allowances and benefits which are given to all employees across agencies; specific purpose allowances and benefits which are given under specific conditions based on actual performance of work; and incentives which are rewards for loyalty to government service and for exceeding performance targets. –Aurea Calica (The Philippine Star)