New regulations prevent gov’t execs from writing their own checks

by ELIJAH JOSEPH C. TUBAYAN

When former President Benigno S. C. Aquino III got elected in June 2010, he vowed to get rid of corruption and institute good governance reforms.

Three months into his term, he signed an Executive Order (EO) to stop government-owned and -controlled corporations (GOCC) officials from receiving excessive bonuses — a practice that was institutionalized during his predecessor’s administration.

Upon signing EO No. 7, then-President Aquino imposed a moratorium on increases in the rates of salaries, allowances, incentives, and other benefits on all GOCCs.

Despite disallowing directors of government corporations from writing their own checks, they were nevertheless entitled to increased adjustments, thanks to Joint Resolution No. 4 of 2009, or the Salary Standardization Law (SSL) 3 — which some GOCCs currently follow and which was approved by then-President Gloria Macapagal Arroyo, then-Senate President Juan Ponce Enrile, and then-Speaker Prospero C. Nograles.

To further tighten check government executives’ salaries and performance, President Aquino signed Republic Act (RA) 10149 into law.

The GOCC Governance Act of 2011 created a regulatory body for the state-run corporations called Governance Commission on GOCCs (GCG), resulting in the review for a standardized compensation scheme for government corporations.

Four and a half years later, Mr. Aquino signed EO 203, allowing all GOCCs covered by the Governance Act to adopt a Compensation and Position Classification System (CPCS). Simply put, the move makes GOCCs’ salary schedule competitive with their private sector counterparts, and more attractive than the SSL3 adopted by national government agencies, as well as some government-run firms.

The measure also intended to curb abuses — as any additional incentives outside the schedule has to be approved by the GCG and the President — but still allowed them to enjoy higher paychecks, “to attract, retain and motivate a corps of competent civil servants.”

Meanwhile, this same presidential directive — which makes salaries of government executives commensurate to private sector pay — was suspended later on by Mr. Aquino’s successor.

A year after assuming office, President Rodrigo R. Duterte signed EO 36, which discontinued Mr. Aquino’s EO 203, due to the same problem: GOCCs’ abuse of excessive salaries and perks. This included the repeal of Section 6 in the same EO, which authorizes additional incentives outside the CPCS upon the approval of the GCG and the President.

In suspending Mr. Aquino’s EO, President Duterte even made sure that any pitch to increase salaries in government-led corporations will have to pass by his office first, adding he wasn’t inclined to approve it.

“You cannot do it on your own. You have to direct it to the Executive Secretary and I will just tell you, I am not inclined to give increases right now,” the President said in his second State of the Nation Address, days before he signed EO 36.

Without these incentives, Mr. Duterte’s directive may discourage officials — especially those coming from the private sector — to continue working in government corporations.

However, according to GCG spokesperson Johann Carlos S. Barcena, these orders nevertheless had the effect of allowing officials to see increases in their salaries, thereby making them stay in their positions.

After all, even though Mr. Duterte suspended Mr. Aquino’s EO 203, officials were still entitled to increased adjustments, based on Joint Resolution No. 4 of 2009.

As a result, “there were officers and employees affected in the sense that their compensation even increased,” Mr. Barcena said in an interview.

This is because ever since Mr. Aquino laid out GOCCs’ uniform salaries, and the approved additional allowances that came with them, none of the state-run firms really had the capacity to adopt it.

“Despite the issuance of EO 203, no GOCC was able to fully comply with its requirements. As such, GOCCs still remained to either be SSL-covered or SSL exempt,” said Mr. Barcena. Salary adjustments still would “depend on the financial capability of the GOCC and their corporate operating budget,” he added.

Currently, almost half of over 200 GOCCs covered by GCG are bound by the 2009 SSL, while some are exempt.

Based on Mr. Duterte’s order, SSL-covered GOCCs shall uniformly adopt the Modified Salary Schedule under EO 201. On the other hand, those exempted can choose to maintain their current compensation framework, or likewise follow EO 201, with the GCG’s approval.

“So by implementing EO 36, that actually moved to retain talent in these corporations that followed the SSL,” said Mr. Barcena. “It was the issuance of EO 36 that would allow these GOCCs to follow the compensation schedule under EO 201.”

Since the moratorium, some SSL-exempt GOCCs haven’t had any salary increases for the past seven years, even adjustments for inflation.

“So in that sense, that move was to at least retain certain talent in these corporations instead of seeing them move to the private sector or elsewhere,” Mr. Barcena said.

However, it does not end there. EO 36 only acts as an interim measure, a prelude to a bigger reform agenda for a new rationalized and harmonized compensation plan — which the GCG is currently reviewing.

“EO 36 is… an interim measure, moving forward for implementing a CPCS, unique to government corporations,” Mr. Barcena said.

The new scheme would be consistent with the same standards laid out in RA 10149, ensuring that the rates of government employees in the government corporate sector would be comparable to the private sector.

“We’re really keen on reforms, even under this administration,” Mr. Barcena said. “They want results at the shortest possible time, and we’re trying to do the best that we can to deliver the results to ensure that during the term of the President, we can have something to show that will benefit the people.”

Elijah Joseph C. Tubayan is a reporter for BusinessWorld. He covers the Department of Finance and the macroeconomy sector.