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Manila Bulletin devider Business devider OECD: Align GOCC pay with private sector to boost governance

OECD: Align GOCC pay with private sector to boost governance

Published Apr 26, 2025 05:44 am

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Bringing the compensation levels of employees and executives at government-owned and/or -controlled corporations (GOCCs) at par with their private-sector counterparts would help strengthen good governance and financial prudence at state-owned enterprises (SOEs) in the Philippines, according to the Organization for Economic Cooperation and Development (OECD).

"Enhancing the GCG's responsibilities and oversight of GOCCs may support better alignment of GOCCs with the state's financial targets, risk tolerance, and sustainability-related expectations, consistent with the state's ownership policy," the OECD grouping of rich nations said in an April 25 report titled "Supporting state-owned enterprise reform in the Philippines," referring to the Governance Commission for GOCCs.

"To foster competitive remuneration for SOE boards and management—while remaining within the parameters of the compensation and position classification system (CPCS) and fiscal constraints—periodic market assessments could play a role in informing future adjustments," the OECD report added.

CPCS aims to put in place a competitive compensation system for GOCC employees while ensuring the financial health of state-run firms.

However, "a recent market analysis carried out by a CPCS consultant concluded that the total guaranteed and cash compensation for some GOCC employees lags behind their counterparts in the private sector," the report said, citing responses from the GCG to a questionnaire from the OECD Secretariat last year.

"The GCG is committed to incorporating the market analysis results in the next version of the CPCS—although at the time of writing a timeline for the CPCS revision was not provided," it added.

Executive Order (EO) No. 150, issued by former President Rodrigo R. Duterte in 2021, calls for a review of CPCS every three years.

The periodic CPCS review considers GOCCs' performance, their overall impact on the national economy, and potential declines in purchasing power caused by inflation.

The GCG, together with the departments of Budget and Management (DBM) and of Finance (DOF), develops and recommends remuneration policies for GOCC executives and employees—including incentives—to the Office of the President (OP).

The DBM and DOF chiefs are ex-officio members of the GCG.

As for GOCCs' boards of directors, the OECD said that "the GCG and its board, which includes members from the DOF and the DBM, actively reviews appropriate board compensation that aligns with public service scales," citing an interview with the DOF last year.

In an earlier report published in December last year, the OECD noted that the number of GOCCs in the country dwindled to 118 in 2024 from 158 in 2011 amid closures of loss-making corporations, mergers, and privatizations.

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