The proposed Salary Standardization Law (SSL) of 2015 emphasizes the controversial nature of our salary system. ACT Teachers Rep. Antonio Tinio commendably raised the serious flaw in the SSL by pointing out that top officials in the government would receive an increase of as much as 233 percent, and the rank and file, as little as 11.89 percent (Inquirer, 11/11/15).
Tinio’s comments are consistent with the criticisms of our salary system from its inception. The system is based on position classification (job classification-private sector), under which compensation is based on the duties and responsibilities of the position. The more difficult the job, the higher the compensation—thus, “equal pay for equal work.”
Position classification was invented in the United States and was transferred to the Philippines under the Bell Report (1952). Unfortunately, those who administered our salary system lost sight of the goal of position classification, which was designed to ensure an equitable system of paying compensation. But it is only a means, not an end.
The desired goal of all salary systems is to pay a “living wage.” In the United States, this means a person working full time should be paid a wage that will meet his/her basic needs for food, utilities, transport, healthcare and minimal recreation. In all wage negotiations in the US public and private sectors, payment of a living wage is the point of reference. Unfortunately, payment of a living wage is not guaranteed in Philippine laws.
Article IX, Part B, Section 5 of the Constitution states: “The Congress shall provide for the standardization of compensation of government officials and employees, including those in government-owned or -controlled corporations with original charters, taking into account the nature and responsibilities pertaining to and the qualifications required for their positions.”
Republic Act. No. 6758, or The Compensation and Position Classification Act of 1989, Section 2, states: “It is hereby declared the official policy of the state to provide equal pay for substantially equal work and to base differences in pay upon substantive differences in duties and responsibilities, and qualification requirements of the positions. In determining rates of pay, due regard shall be given to x x x prevailing rates in the private sector for comparable work.”
RA 6758, which implements the constitutional provision cited, thus makes it very clear that the state’s policy is only to ensure equal pay for equal work. The state does not guarantee the payment of a living wage. This failure to recognize that a public servant is entitled to a living wage is the reason our salary system is in such a mess.
What this means is that the government’s salary structure should be constructed such that the lowest salary grade should provide the employee with an income that will not fall below the poverty level. The lowest pay in the government now is Salary Grade 1, or P9,000 per month. This cannot be a living wage for a married employee with two children. This will have to be revised upward under the living wage doctrine.
The “comparability” of government pay with private-sector pay should also be modified. In the United States, the level of executive pay in the private sector has been under fire. It is estimated that between 1965 and 2007, the difference between the pay of top executives and of ordinary employees has multiplied 25 times. In 2007, executive pay was estimated at 400 times the pay of the rank and file. The wage bias in the private sector has been transferred to the Philippine salary system through the use of the comparability doctrine.
Congress can simplify our compensation system by amending Section 2 of RA 6758 and recognizing that payment of a living wage to all public servants is government policy and that this goal should be implemented on the basis of equal pay for equal work. This will end the constant dispute over what is adequate compensation for each profession. We are witness to endless calls for an increase in compensation for government teachers, nurses, etc., with each sector urging Congress to pass legislation increasing their salary. These separate measures defeat the equal pay for equal work doctrine. Groups with numerous members, like teachers, have an advantage over other employee groups in pushing for their own salary law.
Payment of a living wage will reduce the pay gap between top government officials and ordinary employees. And those of us involved in this issue from the beginning have pointed out that reduced compensation at the topmost levels of the government would not result in loss of executive talent, as many fear. Even if the salary for president is reduced to P1 a year, people will still seek the presidency. There are far more important considerations like power, recognition and fame that will make a person run for president or other top positions in the government (Abraham Maslow’s “Hierarchy of Needs”).
Payment of a living wage need not be implemented immediately; it can be set as a goal. What is most important is that it will do away with the dispute over how to determine the level of compensation in the public service. There will be a universally used point of reference in determining pay levels.
Hermenegildo C. Cruz, a retired ambassador, worked in the Wage and Position Classification Office and the Civil Service Commission before joining the Department of Foreign Affairs. He was a member of the Civil Service Panel of the 1969-72 Reorganization Plan.