Amid the economic downturn, FSM Congress approves 52% pay raise
Updated: Jun 10, 2021
Government workers get an increase of up to 15% for the first time in 24 years
Colonia, Yap — Members of the 21st FSM Congress have approved their first salary increase since 1987, up from $27,000 to $52,000 a year. The speaker received a raise from $30,000 to $55,000.
The pay raise bill was approved during a special session on May 7, and signed into law by President David Panuelo on May 10. It became effective the same day. No public hearings were held.
This is only the third wage increase for members of Congress since 1979.
In addition to base salary, each member of Congress receives “representation funds” that were increased from $100,000 to $150,000.
Panuelo earlier signed into law a one-time increase — of 5, 10 or 15 percent based on pay level effective July 1 — for full-time national government employees.
“A 15 percent annual salary increase for a public servant making $10,000 a year will make a huge difference for them and their families,” Panuelo said in a statement.
The pay raises came amid the economic uncertainty brought about by the Covid-19 pandemic. Although FSM remains coronavirus-free, the nation is not immune to the economic impact of the pandemic.
In a report dated June 2020, by the U.S. Department of the Interior projected that the FSM was “expected to experience a 6.9 percent decline in GDP and a loss of 1,841 jobs, reflecting an 11 percent reduction of employment levels in the FSM compared to fiscal year 2019.”
That economic downturn is reflected in the national government’s $63.76 million budget for fiscal 2021. This fiscal year’s budget dropped by more than $8 million, or more than 11 percent, from the prior year.
The executive branch’s FY2021 allocation is approximately $1.5 million lower than the prior year’s budget; the legislative branch received nearly $2 million less than the prior year; and, the judicial branch’s FY 2021 budget for its operations was reduced by nearly $200,000 compared to the nation’s FY2020 budget.
The source of the monie for pay raises was not clear as of this writing.
However, Panuelo sought to justify the move. “Too many FSM citizens, even before the Covid-19 pandemic, have found it difficult to meet their needs for food, power and water utilities, healthcare, and housing expenses,” he said.
Government employees’ pay rates have been stagnant for 24 years since a salary freeze was imposed in 1997. However, a cost-of-living allowance was put into effect in 2015, providing employees with an additional $40 every 80 hours worked. Elected and appointed officials and employees receiving professional and foreign service premiums are excluded from receiving this allowance.
But the biweekly wage for FSM government employees has remained low, ranging from $137.46 to $860.66, according to the government’s 2008 salary schedule.
On July 1, those employees who are in pay levels 1 to 14 will receive a one-time 15 percent wage increase; in levels 15 to 28, a 10 percent increase; and in pay levels 29 and above, a 5 percent bump. Increased rates are calibrated to “narrow the gap,” said Sen. Isaac V. Figir of Yap, who has been serving in Congress since 1983.
Low wages cause a “brain drain” in the FSM. Citizens leave for higher education and remain in Guam, Hawaii or the mainland U.S. for better career opportunities while many join the US military.
“When even our own government’s employees opt out of government healthcare programs because they cannot afford both healthcare and food,” Panuelo said, “or when citizens must choose between a sack of rice for their family or shoes for their children, it suggests that our nation’s wealth inequality remains as much of an existential threat to our continued sovereignty and wellbeing as climate change.”
Over the years, Congress has voted down proposals for a wage increase for national government employees, noting it would widen the gap between national and state pay rates.
“We come from a state where workers are making very small money. We have tried to talk with the state legislature about doing something,” said Figir.
The Yap State legislature had raised the minimum wage to $1.60, but it was still not enough to catch up with the national average.
“We don’t want to increase the gap between those that make good money, and employees who do not. But we finally came to a point where we thought it was being selfish on our part to continue to use the fact that our people, our state employees, are making very small money,” Figir said.
Yap Delegation chairman Joseph J. Urusemal agreed. “I truly believe that Yap State can make money and pay its employees. But it’s not only compensation.”
Urusemal, who was elected to Congress in 1987 and served as the sixth president of FSM, noted the example of Yap teachers whose daily stipend went up to $30. The state is now mandating budget cuts due to the loss of revenue as a result of border closure. “So the legislature has asked them to go back down to $15,” he said. “That’s an injustice. We tried our best but we knew at some point that we had to approve the [national government wage] increase.”
According to the FSM 2023 Action Plan published in 2015, “As a result of the wage freeze there has been a tendency to inflate professional titles to get staffs on to higher pay-scales.
"Presently, there are different categories of civil servants that are paid depending on the source of funding or type of contract. Leaving the salary freeze issue unaddressed forces management to look for alternatives to solve the problems thereby creating distortions in the institutional framework.”
The plan addresses the fiscal and economic challenges leading up to and after FY2023 when the Amended Compact grants are to be replaced by investment income from the Compact Trust Fund.
Nonetheless, the average wage of national government employees is above that of the four states, with public sector employees overall receiving much higher wages and salaries than private-sector employees.
Last changed on Jan. 1, 2015, the minimum wage for state government employees is $2.65 per hour. By comparison, the minimum wage for Pohnpei’s state workforce is $2.
In the other three states, the minimum wage for state government workers is $1.25 in Chuuk, $1.42 in Kosrae, and $1.60 in Yap. There is no national minimum wage policy and no private sector minimum wage set by the states other than in Pohnpei where it is $1.75.
Other annual salary adjustments approved by Congress and signed into law by the president include an increase for the president from $32,000 to $80,000 that was enacted a few days prior to Panuelo’s May 2019 inauguration, and for the vice president that went from $30,000 to $70,000.
Like Congress, there had been no prior increases for these two positions since 1987.
In addition, the chief justice’s salary was increased from $45,000 to $80,000 and associate justices from $43,000 to $70,000 in April 2021, the first increase since 2007 and only the third since 1983.
“Professional premiums” of up to 90 percent of the value of the base salaries of professional employees who have “achieved advanced professional status in a professional field” such as accountants, engineers, lawyers and PhDs employed by the national government were also adjusted. Calculated and recommended by an outside consultant with expertise in the matter, this premium is currently “not less than 90 percent but no more than 150 percent of the value of the professional’s salary.”
When asked about the salaries of members of the president’s cabinet, Figir replied, “Cabinet members are exempt. Their compensation is not determined by law. It is dependent on their contract negotiations.”