Department of Defense Should Change Pay Setting for Filipino Nationals

FPCD-77-70: Published: Oct 5, 1977. Publicly Released: Oct 5, 1977.

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Authorizing legislation provides that compensation for foreign national employees is based on locally prevailing wage rates that are consistent with the public interest.

The Department of Defense (DOD) employs nearly 22,000 Filipino nationals at an estimated cost of $42 million for fiscal year 1977. Although wage increases have averaged about 8.7 percent since 1971, devaluations of Philippine currency have limited average dollar cost increases to about 6.7 percent annually. Basic conditions of employment are enumerated in a diplomatic agreement between the United States and the Philippines which includes provisions for preferential employment, a joint grievance committee, the right of employees to organize and bargain collectively, wage setting, and midyear bonus. The two current labor agreements and a powerful union hinder DOD efforts to adhere to prevailing practice criteria. As a result, DOD employees are paid considerably more than prevailing private sector rates. The collection of annual wage data is affected by inefficient collection procedures. Because of labor agreements and the cost effectiveness of employing Filipinos, there are relatively few U.S. civilian employees.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should direct the military departments to obtain control over the selection of companies surveyed, separate monetized allowances from base pay, make midyear bonuses part of total compensation based on prevailing amounts, apply average survey results to the Filipino average step, and develop and coordinate occupational inventories to ensure that survey key jobs represent the work force of DOD and U.S. civilian agencies.

    Agency Affected:


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