(UPDATES) PRESIDENT Ferdinand Marcos Jr. issued an executive order (EO) increasing the salaries of government workers and authorizing the grant of an additional allowance to state employees, Malacañang said Saturday.

The President, through Executive Secretary Lucas Bersamin, signed on August 2 EO 64 updating the salary schedule for government employees to "attract, retain, and engage high-performing civil servants."

"Given the prevailing economic circumstances, including the erosion of purchasing power due to inflation, there is a need to update the salaries and benefits of government personnel in order to maintain a competent, committed, agile and healthy workforce, thereby promoting social justice, integrity, efficiency, accountability, and excellence, and ultimately translating to increased productivity and higher-quality public service," Marcos said in his order.

Under EO 64, the updated salary schedule applies to all civilian government personnel in the executive, legislative and judicial branches, constitutional commissions and other constitutional offices.

Government-owned and -controlled Corporations (GOCCs) not covered by Republic Act (RA) 10149, or the GOCC Governance Act of 2011 and EO 150 (s. 2021) and the local government units (LGUs) are also covered by the order.

The salary increase does not apply to individuals working in government through job orders, contracts of service, consultancy or service contracts with no employer-employee relations and GOCCs covered by a separate Compensation and Position Classification System established by the Governance Commission for GOCCs and approved by the President.

Based on EO 64, the first of the four tranches of the salary increase for government workers took effect on January 1 and will be given retroactively.

The second tranche will be implemented on Jan. 1, 2025, while the third and fourth tranches will start on the same date in 2026 and 2027.

For covered GOCCs, the retroactive application of the first tranche will be subject to the entities' capacity to pay and comply with other requirements under existing laws.

The rates in LGUs will be determined based on the class and financial capability of each LGU.

The funding requirements for salary increases in national government agencies will be charged against any available appropriation under RA 11975 of the 2024 General Appropriations Act or any other available appropriations.

For GOCCs, the budget will be taken from their respective corporate funds in the operating budgets approved by the Department of Budget and Management (DBM).

The funds for the pay hike among LGU personnel will be charged to their respective local governments.

The basic pay of village personnel will be in the form of honoraria, while their year-end bonus will be based on the monthly honoraria as of October 31 of the year and P5,000 worth of cash gift may also be given to them.

Medical allowance

On top of the salary increase, qualified government employees will receive a medical allowance of P7,000 starting in 2025 as a subsidy for the availment of health maintenance organization or HMO-type benefits.

The grant of the medical allowance will be subject to the conditions and guidelines that will be issued by the DBM or the GCG.

Government officials and employees with HMO-based health care services under special laws, as well as officials and employees in the legislative and judicial branches and other offices vested with fiscal autonomy, are excluded from the grant of the medical allowance.

"The heads of the foregoing agencies and offices may grant a similar medical allowance to their employees to continue to procure allowable HMO plans, subject to the limitations and guidelines that the DBM may issue in consultation with the said offices," the President said.

Funding requirements for medical allowance for next year and succeeding fiscal years will be included in the National Expenditure Program as a component of the Standard Allowances and Benefits of the Total Compensation Framework, subject to the approval of Congress.

EO 64, released to the media on Saturday, takes effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.

Swift issuance of DBM guidelines

Following the President's directive, Budget Secretary Amenah Pangandaman on Saturday ordered the swift issuance of guidelines for the salary adjustments of government workers.

"I already instructed our concerned DBM officials to swiftly complete the guidelines for the approved salary increase," Pangandaman said in a statement.

"We will rush the implementing guidelines so that government employees will see their first round of salary increases this 2024," she added.

Pangandaman said approximately P36 billion from the Miscellaneous Personnel Benefits Fund (MPBF) under the 2024 General Appropriations Act would be allotted for the implementation of the first tranche of salary increases.

She added that the DBM has earmarked around P70 billion under the 2025 MPBF to cover the additional cost requirements for both first and second tranches.

Pangandaman expressed gratitude to Marcos for making her dream to increase government workers' salaries "finally become a reality."