The government has formally implemented the third phase of the multi-year pay hike for civilian state workers, part of a broader strategy to bridge the compensation gap with the private sector and curb a “brain drain” of skilled talent from the public rolls.

The Department of Budget and Management (DBM) issued the implementing guidelines for the third tranche of the updated salary schedule effective Jan. 1, 2026, according to a national budget circular signed Jan. 22.

The adjustment, mandated by Executive Order No. 64, seeks to establish competitive and sustainable compensation system capable of attracting high-performing personnel to the bureaucracy.

Under the new schedule, entry-level monthly base pay for the lowest-ranking personnel at Salary Grade 1 is set at ₱14,634. The adjustments scale up significantly across the 33-grade hierarchy, with Salary Grade 10 rising to ₱26,917 and Salary Grade 15 reaching ₱42,178.

Senior officials at Salary Grade 30 will see monthly pay of ₱210,718, while the highest position at Salary Grade 33 is pegged at ₱449,157 for the first step. For casual employees, daily wages will be derived by dividing the monthly rate by 22 working days.

The guidelines imposed a cap on the adjustments, with pay ceilings generally set at Step 8 of each grade. For instance, the maximum rate for Salary Grade 1 is ₱15,456.

In a move to manage fiscal space, employees whose salaries as of late 2025 already exceed the Step 8 ceiling of the new schedule will not be eligible for additional increases.

While the rates apply across the executive, legislative, and judicial branches, as well as state universities and constitutional commissions, the government has maintained specific exclusions.

Military and uniformed personnel, who are covered by a separate compensation structure, are not included, nor are individuals hired under job orders or contracts of service.

To comply with constitutional prohibitions against self-benefit, the pay raises for the president, vice president, and members of Congress will only take effect after the expiration of the current incumbents' terms.

Funding for the hikes is already integrated into the 2026 General Appropriations Act for national agencies. However, state-run corporations face more stringent hurdles, as they must fund the adjustments from their own corporate operating budgets.

These firms are prohibited from borrowing to cover personnel costs and may only implement the raises if they meet performance targets. The DBM warned that officials who authorize payments outside these guidelines will be held liable, and any overpayments must be refunded by the recipients. (Derco Rosal)