Curbing excessive compensation for GOCC officers and employees

Several months ago, revelations that certain officers and employees of government-owned and -controlled corporations (GOCCs) were receiving huge amounts of salaries and bonuses sparked a big controversy.  There were calls for imposing limitations on the amount of compensation that GOCC officers and employees can receive.

The answer of Congress?  Republic Act No. 10149, entitled “An Act to Promote Financial Viability and Fiscal Discipline in Government-owned or -controlled Corporations and to Strengthen  the Role of the State In Its Governance and Management and To Make Them More Responsive to the Needs of Public Interest and For Other Purposes.”

While RA 10149 was intended to address various issues relating to GOCCs, one of its primary goals is to ensure that:

Reasonable, justifiable and appropriate remuneration schemes are adopted for the directors/trustees, officers and employees of GOCCs and their subsidiaries to prevent or deter the granting of unconscionable and excessive remuneration packages. . .

The law creates the Governance Commission for Government-Owned and -Controlled Corporations (GCG) and mandates the GCG to conduct a compensation study and to  develop a Compensation and Position Classification System which shall apply to all officers and employees of the GOCCs whether under the Salary Standardization Law or exempt therefrom and which shall consist of classes of positions grouped into such categories as the GCG may determine, subject to the approval of the President. (RA 10149, sec. 8).

Under section 9 of RA 10149, the following principles shall govern the Compensation and Position Classification System:

(a) All GOCC personnel shall be paid just and equitable wages in accordance with the principle of equal pay for work of equal value. Differences in pay shall be based on verifiable Compensation and Position Classification factors in due regard to the financial capability of the GOCC;

(b) Basic compensation for all personnel in the GOCC shall generally be comparable with those in the private sector doing comparable work, and must be in accordance with prevailing laws on minimum wages. The total compensation provided for GOCC personnel shall be maintained at a reasonable level with due regard to the provisions of existing compensation and position classification laws including Joint Resolution No.4, Series of 2009, and the GOCCs operating budget; and

(c) A review of the GOCC compensation rates, taking into account the performance of the GOCC, its overall contribution to the national economy and the possible erosion in purchasing power due to inflation and other factors, shall be conducted periodically.

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