Public sector compensation in the Philippines has undergone significant transformation over the decades, evolving from a fragmented system to one that strives for equity and transparency. The government's methodical approach to structuring pay through grades and steps has created a framework that both employees and administrators can navigate with greater clarity. This article explores how this system works, its benefits, and the path forward for public compensation in the Philippines.

Understanding the Salary Grade System

The Philippine government employs a systematic approach to compensation through its Salary Grade (SG) system, which was established under the Compensation and Position Classification Act of 1989 (Republic Act No. 6758). This landmark legislation, commonly known as the first Salary Standardization Law (SSL), introduced a framework that categorizes all government positions into 33 salary grades, with each grade having multiple steps. 

"The salary grade system was designed to address the historical inequities in government compensation," explains Dr. Maria Santos, a public administration professor at the University of the Philippines. "Before this standardization, similar positions across different agencies could have vastly different pay scales, creating unnecessary competition and mobility issues within government service."

Each salary grade corresponds to a specific level of responsibility, qualification requirements, and complexity of work. For instance, entry-level positions typically fall within SG-1 to SG-10, while department secretaries and other high-ranking officials are classified under SG-31 to SG-33. -1

The Step Increment Mechanism

Within each salary grade, there are eight steps that allow for salary progression based on merit and length of service. This step increment system provides government employees with a clear path for salary advancement without necessarily requiring promotion to a higher position.

According to Department of Budget and Management (DBM) guidelines, employees typically advance one step annually based on satisfactory performance evaluations. This system creates a predictable trajectory for salary growth that helps in retention and career planning. 

For example, a public school teacher with Teacher I position (SG-11) can progress through eight steps within that grade before requiring promotion to Teacher II (SG-12). Each step represents approximately a 3-5% increase in basic salary, providing incremental but meaningful growth in compensation. 

Recent Developments Under SSL VI

The latest iteration of the Salary Standardization Law, SSL VI, implemented through Executive Order No. 64 signed by President Ferdinand Marcos Jr. in 2024, continues the tradition of improving public sector compensation through a structured approach. 

SSL VI implements salary adjustments in four annual tranches from 2024 to 2027, with specific increases for each salary grade and step. This phased implementation allows the government to manage the fiscal impact while providing predictable increases for employees. 

"Ang maganda sa SSL VI, alam ng mga kawani kung kailan at magkano ang inaasahang pagtaas ng kanilang sahod," notes Civil Service Commissioner Antonio Santos. ("What's good about SSL VI is that employees know when and by how much their salaries will increase.") This predictability helps government workers plan their finances more effectively. 

Practical Benefits of the Grade-Step System

The grade and step system offers several practical advantages for both employees and the government:

1. Transparency: Employees can easily understand where they stand in the compensation structure and what they can expect in the future.

2. Equity: Similar positions across different agencies receive comparable compensation, reducing internal disparities.

3. Career Planning: The clear progression path helps employees set career goals and understand the financial implications of various career moves.

4. Retention: The step increment system rewards longevity in service, encouraging experienced employees to remain in government.

5. Budgetary Planning: Government agencies can more accurately project personnel expenses based on the predictable structure of salary increases.

Case Study: The Impact on Education Professionals

The Department of Education (DepEd), the largest government agency in the Philippines with over 900,000 employees, provides an excellent case study of how the salary grade and step system affects public servants.

Maria Concepcion, a Teacher III at a public elementary school in Quezon City with 15 years of service, shares her experience: "When I started as Teacher I at SG-11 Step 1 in 2008, my salary was around ₱15,000 monthly. Now, as Teacher III at SG-13 Step 7, I earn over ₱35,000 basic salary. The step system has given me regular increases even in years when I wasn't promoted."

Under SSL VI, education professionals will see further improvements in their compensation. For instance, a Teacher I position (SG-11) that received ₱27,000 monthly in 2023 will progressively increase to approximately ₱32,000 by 2027 after all four tranches of SSL VI are implemented. 

Challenges and Room for Improvement

Despite its advantages, the salary grade system still faces challenges:

1. Compression Issues: The difference between adjacent salary grades, particularly at lower levels, remains small, sometimes creating compression where the financial incentive for promotion is minimal.

2. Regional Cost Variations: The standardized national scale doesn't account for significant differences in the cost of living across regions, potentially disadvantaging those in high-cost areas like Metro Manila.

3. Performance Linkage: Critics argue that the largely time-based step progression doesn't sufficiently reward exceptional performance, as noted in DBM performance evaluation studies. 

Navigating the System: Resources for Government Employees

Government employees seeking to understand their compensation better can access several resources:

1. The official DBM website (www.dbm.gov.ph) provides updated salary tables and circulars related to compensation.

2. Agency Human Resource departments maintain specific information about position classifications and step increments.

3. The Civil Service Commission offers guidance on qualification standards that affect salary grade assignments.

For detailed information about specific positions and their corresponding salary grades, employees can visit government resources dedicated to explaining the salary grade system. These resources typically include comprehensive tables showing the exact compensation for each grade and step, along with explanations of how progression works. -2

The Path Forward

As the Philippines continues to refine its public sector compensation system, several developments are worth watching:

1. Performance-Based Components: Future iterations of the SSL may incorporate stronger performance-based elements to reward exceptional service.

2. Digital Transformation: The digitalization of HR systems in government is making it easier for employees to track their progression through the step system and understand their compensation prospects.

3. Competitiveness Reviews: Regular benchmarking against private sector compensation will help ensure that government salaries remain competitive enough to attract talent.

"The salary standardization journey isn't complete," notes former Budget Secretary Benjamin Diokno. "But the clear structure of grades and steps has given us a solid foundation on which to build a more competitive, fair, and transparent compensation system for our public servants." 

Conclusion

The Philippine government's approach to public compensation through clearly defined salary grades and steps represents a significant improvement over previous systems. While challenges remain, the structure provides transparency, equity, and predictability that benefit both employees and the government as an employer.

For government employees and those considering public service careers, understanding this system is essential for career planning and financial management. The continued refinement of this approach, particularly through successive Salary Standardization Laws, demonstrates the government's commitment to improving public sector compensation while maintaining fiscal responsibility.

As the implementation of SSL VI continues through 2027, millions of government employees can look forward to predictable increases in their compensation, contributing to improved morale and, ultimately, better public service delivery for all Filipinos.

Source：https://www.personalloan.ph/articles/government-employees-salary-grade