The government has set in motion the third round of salary increases for civilian state workers, with higher pay rates taking effect Jan. 1, 2026, under new guidelines issued by the Department of Budget and Management (DBM).
National Budget Circular 601, dated Jan. 22, directs agencies to implement the third tranche of the four-year compensation adjustment program under Executive Order 64, s. 2024, part of a broader effort to modernize the public-sector pay structure.
According to DBM, the updated salary schedule aims to build “an effective, competitive, and sustainable Compensation and Position Classification System (CPCS) that attracts, retains, and engages high-performing civil servants.”
The increase covers civilian personnel across the executive, legislative and judicial branches, constitutional commissions, state universities and colleges, and government-owned or controlled corporations (GOCCs) that remain under the DBM’s compensation system.
Not covered are military and uniformed personnel, student workers and apprentices, short-term consultants and experts, job order and contract-of-service workers, and GOCCs operating under a separate CPCS approved by the President.
Under the revised schedule, monthly salaries across 33 salary grades will move to third-tranche levels. Entry-level pay will rise to about P14,730, while top positions will exceed P460,000, depending on grade and step.
The circular also lays out transition rules. Incumbents will shift to the equivalent step in the new schedule, while new hires and most casual and contractual staff will start at Step 1 of their salary grade.
Employees already earning beyond their grade ceiling will not receive additional increases. Those above Step 8 “shall not be entitled to salary increase” under this tranche, the DBM said.
Compulsory retirees whose services are extended beyond Dec. 31, 2025 may still receive the adjustment, although retirement and terminal leave benefits will be computed based on their pre-retirement salary.
Funding for the pay hike has been built into the 2026 General Appropriations Act, with the DBM saying the required amounts are already included in agency budgets.
Covered GOCCs must finance the increases from their own corporate operating budgets. The national government will not release additional funds, and firms are barred from borrowing to cover the adjustments.
The DBM added that implementation will be subject to audit review, with any overpayments to be refunded.
As in previous tranches, constitutional limits apply to top elected officials, meaning salary increases for the President, Vice President and members of Congress will take effect only after their current terms end.
