MALACAÑAN PALACE
MANILAEXECUTIVE ORDER NO. 7
DIRECTING THE RATIONALIZATION OF THE COMPENSATION AND POSITION CLASSIFICATION SYSTEM IN THE GOVERNMENT-OWNED AND-CONTROLLED CORPORATIONS (GOCCs) AND GOVERNMENT FINANCIAL INSTITUTIONS (GFIs), AND FOR OTHER PURPOSES
WHEREAS, transparency, accountability and prudence in government spending are among the core governance policies being adopted by this administration;
WHEREAS, while Government Owned and Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs), by the 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;
WHEREAS, 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;
WHEREAS, under Item (9) of the Senate and House of Representatives Joint Resolution (J.R.) No. 4, s. 2009, agencies exempted from Republic Act (R.A.) No. 6758, as amended, shall observe the policies, parameters and guidelines governing position classification, salary rates, categories and rates of allowances, benefits,...
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Executive Orders
Directing the Rationalization of the Compensation and Position Classification System In the Government-Owned and-Controlled Corporations (GOCCS) and Government Financial Institutions (GFIS), and For Other Purposes
Executive Order No. 7
Summary of Executive Order No. 7
Rationalization of Compensation and Position Classification System in GOCCs and GFIs
- Directs the rationalization of the compensation and position classification system in all GOCCs and GFIs. (Section 1)
- Outlines guiding principles for rationalization, including equal pay for equal work, comparability with private sector, standardization, performance-based incentives, periodic review, and fiscal prudence. (Section 2)
Total Compensation Framework
- Categorizes all remuneration into: (Section 3)
- Basic salaries and step increments
- Standard allowances and benefits
- Specific-purpose allowances and benefits
- Incentives for loyalty and exceeding performance targets
Standard Components of Compensation and Position Classification System
- Compensation System: (Section 4a)
- Salary schedule and rules for salaries and step increments
- Set of allowances, benefits, incentives, and guidelines
- Position Classification System: (Section 4b)
- Index of occupational groups, classes, and salary grades
- Specifications for each class of positions
- Rules and procedures for administration and maintenance
Rationalization of Indirect Compensation
- Provident fund benefits, additional health insurance, and other indirect compensation shall be rationalized based on policies recommended by the Task Force. (Section 5)
Considerations in Setting Compensation Levels
- Factors to consider include coverage under RA 6758, strategic position, proprietary nature, technical skills required, industry comparability, financial viability, personal services expenditure proportion, privatization plans, and other relevant factors. (Section 6)
Task Force on Corporate Compensation (TFCC)
- Created to review remuneration and discretionary funds of GOCCs and GFIs. (Section 7)
- Composed of the Office of the President (Chair), DBM, DOF, and CSC.
- Responsibilities: (Section 7a-c)
- Prepare inventory of salaries, allowances, incentives, benefits, and discretionary funds
- Categorize remuneration according to Total Compensation Framework
- Recommend measures to rationalize compensation and discretionary funds, including caps
- Submit report to the President within 90 days
Submission of Information on Personnel Remuneration
- GOCCs and GFIs shall submit information on salaries, allowances, incentives, benefits, and discretionary funds to the TFCC, certified by the supervising Department Secretary. (Section 8)
Moratorium on Increases
- Imposes moratorium on increases in salaries, allowances, incentives, and benefits, except for salary adjustments under EO 801 and EO 900, until authorized by the President. (Section 9)
Suspension of Allowances, Bonuses, and Incentives for Board Members
- Suspends the grant of allowances, bonuses, incentives, and perks to board members of GOCCs and GFIs, except reasonable per diems, until December 31, 2010, pending new policies and guidelines. (Section 10)
Effectivity
- The Executive Order takes effect immediately upon publication. (Section 11)
Rationalization of Compensation and Position Classification System in GOCCs and GFIs
- Directs the rationalization of the compensation and position classification system in all GOCCs and GFIs. (Section 1)
- Outlines guiding principles for rationalization, including equal pay for equal work, comparability with private sector, standardization, performance-based incentives, periodic review, and fiscal prudence. (Section 2)
Total Compensation Framework
- Categorizes all remuneration into: (Section 3)
- Basic salaries and step increments
- Standard allowances and benefits
- Specific-purpose allowances and benefits
- Incentives for loyalty and exceeding performance targets
Standard Components of Compensation and Position Classification System
- Compensation System: (Section 4a)
- Salary schedule and rules for salaries and step increments
- Set of allowances, benefits, incentives, and guidelines
- Position Classification System: (Section 4b)
- Index of occupational groups, classes, and salary grades
- Specifications for each class of positions
- Rules and procedures for administration and maintenance
Rationalization of Indirect Compensation
- Provident fund benefits, additional health insurance, and other indirect compensation shall be rationalized based on policies recommended by the Task Force. (Section 5)
Considerations in Setting Compensation Levels
- Factors to consider include coverage under RA 6758, strategic position, proprietary nature, technical skills required, industry comparability, financial viability, personal services expenditure proportion, privatization plans, and other relevant factors. (Section 6)
Task Force on Corporate Compensation (TFCC)
- Created to review remuneration and discretionary funds of GOCCs and GFIs. (Section 7)
- Composed of the Office of the President (Chair), DBM, DOF, and CSC.
- Responsibilities: (Section 7a-c)
- Prepare inventory of salaries, allowances, incentives, benefits, and discretionary funds
- Categorize remuneration according to Total Compensation Framework
- Recommend measures to rationalize compensation and discretionary funds, including caps
- Submit report to the President within 90 days
Submission of Information on Personnel Remuneration
- GOCCs and GFIs shall submit information on salaries, allowances, incentives, benefits, and discretionary funds to the TFCC, certified by the supervising Department Secretary. (Section 8)
Moratorium on Increases
- Imposes moratorium on increases in salaries, allowances, incentives, and benefits, except for salary adjustments under EO 801 and EO 900, until authorized by the President. (Section 9)
Suspension of Allowances, Bonuses, and Incentives for Board Members
- Suspends the grant of allowances, bonuses, incentives, and perks to board members of GOCCs and GFIs, except reasonable per diems, until December 31, 2010, pending new policies and guidelines. (Section 10)
Effectivity
- The Executive Order takes effect immediately upon publication. (Section 11)