Economic Impact of the Salary Standardization Law III (NEDA paper presented to Rep. Tinio)
Economic Impact of the Salary StandardizationLaw III (click to open)
Citing NEDA findings, ACT Teachers Party-List Antonio Tinio called on Congress to again amend the Salary Standardization Law and begin a new round of salary increases, saying that pay hikes spur the country’s economy.
On August 1, the first hearing of the proposed 2013 budget, Tinio asked the National Economic Development Authority (NEDA) to analyze the economic impact of granting periodic increases in the salaries of state workers. NEDA examined the effects of government spending without SSL III and compared it with SSL III’s initial and full effects in 2009 and 2012, respectively.
NEDA found that throughout the four-year implementation of Salary Standardization Law III, the pay hikes “generated positive impacts for the economy,” raising GDP growth rate by a maximum of 0.03 percentage point (ppt) in 2009 and 0.14 this year. Pay hikes reduced unemployment (by 0.008 ppt in 2009 and 0.035 in 2012) even as they increased investments (by 0.04 ppt in 2009 and 0.17 ppt in 2012).
Salary increases led to real GDP growth and employment by boosting the agriculture, industry, and services sectors, the productive sectors of the economy. NEDA also proved that increasing salaries does not drive up inflation rates.
NEDA also said that pay hikes attracted more workers into the civil service and likely contributed to better quality of the employees.
“The country’s socio-economic planner is basically saying that the country would realize economic gains if government spends more for the salaries of state workers,” Tinio said. He then urged Congress and the Aquino administration to immediately begin amending the SSL anew.
Tinio, however, observed that unless Congress legislates new increase or approves higher spending for personnel services under the 2013 budget, there will be no significant wage hikes for 2013 and beyond. Teachers and other government employees are in danger of facing another dark period of having their incomes stagnated, which they experienced under the Arroyo administration, when Congress failed to legislate for salary increases from 2002 to 2007.
“His previous statements against general salary increases, as well as the lack of funding under his proposed budget for salary increases and new and higher benefits, mark President Aquino in the eyes of state workers as anti-people and anti-worker.”
In previous statements, Tinio scored Aquino’s performance-based bonus, a P10 billion-worth item under the 2013 budget which entails a ban on new and higher bonuses, as attacks against unions and the rights to collective bargaining and living wage.