“The payment of just and equitable compensation to all government personnel…that is generally comparable with those in the private sector” was a governing principle that President Benigno Aquino III highlighted in his Executive Order No. 201 last Feb. 19.
It is so basic, it cannot be contradicted.
He must have wanted to leave as his legacy to our public servants this kind of compensation system, albeit to be realized in four tranches.
But, who knows about these compensation systems from which his government compensation system would be compared with?
Indeed, reputable research groups regularly conduct compensation surveys in companies that willingly disclose their compensation system. In practice, of course, only the top companies of their industry sector participate in these surveys. Why would a losing company that pays low wages bother to participate?
Thus, these surveys tend to show only the wages in elite companies, which are relatively high, and they are what emerging companies use as benchmark if they want to upgrade their compensation system.
E.O. 201 must have been benchmarked, too, from these wage surveys so that after its last tranche, government workers would be paid higher than the typical private sector workers.
But even today, government workers are already paid handsomely.
They now receive allowances for transportation, meal, clothing, hazard, and housing and bonuses for company anniversary, productivity and on their birthdays. They also get 13th and 14th month bonuses. Rank-and-file employees are paid overtime and night differential pay while officials get representation allowance and car loan subsidies.
Government-owned corporations contribute additionally to their provident or retirement fund, which constitutes a significant part of their compensation on top of what are being remitted for them to the Government Service Insurance System, PhilHealth, and Pag-IBIG.
Obviously, all of these when added together form a significant part of a public sector worker’s total compensation.
They are not received by a typical private sector worker, who may not be even paid the legal minimum wage.
The superiority of the compensation system of government employees becomes more pronounced if only their pension system under the GSIS is viewed as part of total compensation.
And why would pensions not be considered part of compensation?
When salaries are paid, a part of them is deducted as a worker’s contribution to his pension fund. His employer also contributes its share to the same pension fund instead of paying it directly to the worker. These contributions would be paid later as pensions, which by then could be considered deferred compensation.
This is equivalent to spreading a worker’s total compensation over his lifetime.
After working for government for 40 years and earning P30,000 monthly in the last five years, he would receive a lifetime, tax-free monthly GSIS pension of P27,000.
His private sector counterpart, who also earned P30,000, would get from the Social Security System a monthly pension of only P13,140.
This is not even half of the pension of the government worker, who obviously would be receiving a lifetime compensation far more than his private sector counterpart.
The pension gap is even magnified if both earned P50,000 monthly. The public sector worker would get P45,000 as pension, while his private sector pensioner would get the same P13,140.
Why has this happened?
Finance Secretary Sonny Dominguez provided the explanation when he delivered his keynote address at the 59th anniversary celebration of SSS last Friday, stating that—
“Under the present system, SSS members contribute 11 percent applied to a maximum monthly income of P16,000. In contrast, GSIS members pay at a much higher 21 percent contribution rate that applies to the worker’s entire monthly salary since it has no restriction similar to SSS’ maximum monthly salary credit.
“To illustrate, given a monthly income of P50,000, the amount of contribution per month would be P1,760 under the SSS. Meanwhile, a GSIS member with the same income would remit P10,500 per month, nearly six times more compared with the amount of SSS contribution.”
Until January 1, 2003, the SSS pension system was still just and equitable, and not the subject of complaints.
Both pension systems had the same maximum salary credit, but the GSIS contribution rate was 18 percent of salary credit while the SSS rate was only 8.4 percent. GSIS pensions were computed 2.5 percent of salary for every year of service. For SSS pensions, the multiplier was 2 percent.
These contribution and benefit systems are still reconcilable.
And in what could very well be the Duterte administration’s policy statement about the SSS pension system, Secretary Dominguez diplomatically conveyed in his anniversary address what should be done immediately—
“The SSS contributions cannot compare with the contributions of the GSIS and that’s why the benefits are not as good as those in the GSIS. This is something I think we should all sit down and consider how it can be improved.”
Obviously, he meant reestablishing a just and equitable pension system for all private sector personnel similar to what is being enjoyed now by public sector workers. Realistically, it could be attained only after several scheduled contribution and pension increases over the next 20 years.