QUESTIONS & ANSWERS on the COMPENSATION and POSITION CLASSIFICATION SYSTEM (CPCS)
Q: What is the CPCS? Why do GOCCs have it?
A: The CPCS is one of the major human capital management reforms in the GOCC Sector towards bringing the Filipino people world class public service.
Prior to the Aquino Administration, compensation of certain GOCCs exempted from the Salary Standardization Law (SSL) was set by the Board of Directors of each GOCC with no uniform framework for the Sector. This resulted in abusive compensation practices in some GOCCs, which Executive Order No. 7, s. 2010, addressed by placing a moratorium against increases in compensation unless specifically approved by the President.
However, the other side of the problem was that many of the other GOCCs were losing many talented individuals to the private sector since compensation levels were not competitive.
Accordingly, the “GOCC Governance Act of 2011” (R.A. No. 10149) required the Governance Commission to develop a uniform framework for all GOCCs covered by the law that would enable GOCCs to attract, retain and motivate a corps of competent civil servants.
The CPCS was developed in collaboration with Towers Watson, a leading Human Resource (HR) consulting firm both locally and internationally, following a rewards philosophy that the GOCC compensation must:
- be generally competitive with the private sector doing comparable work in order to attract, engage, and retain the right talent;
- ensure reasonable, justifiable, and appropriate remuneration schemes, within affordability limits and sustainability capacities of the GOCCs; and
- provide rewards that support and encourage performance-driven, productive, and efficient organizations.
Q: Why should civil servants in GOCCs be paid rates that are competitive with the private sector? Shouldn’t public service be a noble calling and not motivated by profit?
A: While public service shall always remain a noble calling, this principle must be balanced with the need to attract, retain and motivate the best and the brightest in light of the external pressures brought about by the highly competitive environment for talented Filipinos, both on a local and global scale.
While there are Filipinos who are more than willing to serve with little regard for competitive compensation, they are a rare breed and are generally individuals who have already achieved a satisfactory level in their personal economic situations.
Majority of the talented Filipinos are new graduates or young managers/ professionals who are starting out or in the middle of their career, and who merely seek to provide or sustain a good life for their families while also serving the Filipino people.
Accordingly, the CPCS does not make GOCC personnel paid more than everyone else. Rather, it only aligns the compensation of GOCCs personnel along the median of the market based on Towers Watson’s database of compensation for over 200,000 jobs across over 240 companies in the private sector, which is the most extensive database in the Philippines.
Q: Is it proper for GOCCs such as SSS and GSIS to be under the CPCS and have compensation that is competitive with the private sector?
A: The position that the pay for SSS and GSIS officers should be lowered in view of the rate of pensions may be popular but is actually counter-intuitive.
GOCCs such as SSS and GSIS cannot simply rely on the contributions mandated by law. They must maintain an acceptable collection efficiency rate and invest the funds received to maintain the financial viability of its operations. This requires the GOCC to be run by competent and motivated managers and professionals who are also sought after by large companies in the private sector. Unreasonably lowering compensation would only result in the loss of talent without addressing the goal of improving the pension system. Notably, personnel expenses on average accounted for 5% and 4% of total expenses for SSS and GSIS respectively.
The key is to hold SSS and GSIS officials accountable for achieving concrete and measurable breakthroughs in improving the country’s pensions system, which is done through the GOCCs Performance Scorecards that are available for public scrutiny on the websites of both GCG and the GOCC concerned.
Q: How will this reform the current compensation system of GOCCs?
A: The CPCS standardizes compensation in GOCCs and makes it transparent by making public the rates of salaries, allowances and benefits.
Moreover, the CPCS streamlines the number of allowances to only 5 such that the basic salary represents almost all of the total compensation of a GOCC officer or employee with no more hidden allowances or bonuses.
1. Basic salary
2. Standard allowance and benefits
(e.g. Mid-year Bonus, Year-end Bonus, rice, meal and clothing allowance)
Depending on Type of Job:
Specific Purpose Allowance (e.g. hazard pay)
Depending on Performance:
Variable Pay or Performance-Based Bonus
Q: Will all GOCCs be covered by the CPCS?
A: Only GOCCs under the jurisdiction of R.A. No. 10149 shall be covered by the CPCS.
Q: What is the assurance that GOCCs will not abuse the CPCS?
A: Before adopting the rates under the CPCS, each covered GOCC, acting through its Governing Board, shall adopt a Total Compensation Framework (TCF) subject to the recommendation of the Governance Commission and approval of the President. GCG shall vet the proposed Total Compensation Framework to ensure that it meets the guidelines and the same is financially viable. If the GOCC Governing Board were to add compensation beyond the approved TCF, the same would be disallowed by the Commission on Audit (COA) for being unauthorized compensation and the Board and/or the personnel receiving such unauthorized compensation would be personally liable to restitute the same.
Q: Why is the compensation of GOCC personnel different from personnel in the National Government Agencies (NGA)? Aren’t they all civil servants who should be paid based on just one uniform standard?
A: The CPCS has been developed in such a way that compensation in GOCCs is also aligned with the Salary Standardization Law (SSL) for NGAs. The reason for the current difference lies mainly in the source of funding since majority of the GOCCs can implement compensation reforms using revenues generated from their operations. NGAs, on the other hand, draw their resources from the General Appropriations Act, and must contend with the available fiscal space arising from the need to fund many other important projects and programs of government.
Q: Will the CPCS be subject to change?
A: The CPCS is subject to periodic review by the Governance Commission to ensure that it remains competitive and applicable considering changes in the financial environment. Changes will be made public prior to implementation.