LGU Salary Grade Adjustments – Pay Differences by Province & City Class

Government workers often compare pay between national agencies and Local Government Units (LGUs). One common question is: Why do some municipal employees earn less than those in Metro Manila, even at the same salary grade?

The answer lies in LGU salary grade adjustments, where pay depends on the income classification of each LGU. In this guide, we’ll break down how LGU salaries differ, why classification matters, and what the 2025 adjustments mean for employees.

Understanding how LGU salary grade adjustments work is crucial for budgeting, career planning, and fair compensation discussions. This article breaks down everything you need to know about LGU pay differences by province and city class, including updated rates, implementing rules, and examples based on actual government pay structures.

How LGU Salary Grade Adjustments Work

Legal Basis

LGU salary adjustments are guided by several issuances:

• Republic Act No. 6758 (Salary Standardization Law)

• Local Budget Circular (LBC) No. 121 – “Implementation of the Fourth Tranche of the Modified Salary Schedule for Local Government Personnel”

• Local Government Code of 1991 (RA 7160) – granting fiscal autonomy to LGUs to adjust pay based on their income class.

Under these laws, LGUs can modify salaries based on their financial capability, provided they follow DBM’s prescribed salary schedule limits.

Sample Computation of LGU Salary Grades

Here’s how salaries differ across LGUs for SG 11, Step 1 (2025 table = ₱30,024):

This explains why location strongly impacts pay for government workers.

City and Municipality Classifications

LGUs in the Philippines are classified into income classes by the Department of Finance (DOF), based on their average annual income from the previous four years.

As seen, a difference of ₱2,000–₱10,000 monthly is common depending on LGU class.

Implementation of Salary Adjustments

Step-by-Step Process

1. Assessment of LGU Income

   • The local accountant and treasurer review the latest DOF certification of income class.

2. Preparation of Salary Schedule

   • The Human Resource Management Officer (HRMO) drafts a proposed schedule aligned with DBM circulars.

3. Sanggunian Approval

   • The proposed salary ordinance is reviewed and approved by the Sangguniang Panlalawigan/Panlungsod/Bayan.

4. Budget Allocation

   • Implementation requires available funds under Personnel Services (PS) in the Annual Budget.

5. DBM Review

   • DBM Regional Office validates compliance with national guidelines before approval.

Factors That Affect LGU Pay Differences

1. Income Classification

   • Higher-income LGUs afford higher salary schedules.

2. Local Revenue Generation

   • Cities with strong business taxes or real property income often pay better.

3. Internal Revenue Allotment (IRA) / National Tax Allotment (NTA)

   • Determines how much funding the LGU receives annually.

4. Number of Employees

   • The fewer employees an LGU has, the easier it is to allocate higher salaries.

5. Local Priorities

   • Some LGUs prioritize infrastructure or social programs over salary increases.

Expert and Legal References

According to the Department of Budget and Management (DBM) through LBC No. 121 (2024):

“Local government units may adopt a modified salary schedule provided it does not exceed the salary rates under the national government and is supported by adequate funding.”

Additionally, DOF Department Order No. 23-08 defines LGU income classification, which directly influences compensation adjustments.

This means your salary depends not only on your position but also on your LGU’s financial strength.

LGU vs. National Government Salaries

Key Takeaway:
While the DBM sets standard salary rates, implementation flexibility allows poorer LGUs to pay below the national rate.

How to Know Your LGU’s Salary Grade and Rate

You can check your current or target LGU’s pay structure by:

• Visiting your LGU’s HR or Budget Office

• Checking posted salary ordinances (available via local websites or bulletin boards)

• Referring to DBM Circulars (especially LBC Nos. 121, 122, 123 series)

• Contacting the DBM Regional Office

If you’re applying to a position, always ask if the LGU implements full or partial salary standardization.

Frequently Asked Questions

Salary grade adjustments across LGUs in the Philippines reflect the country’s diverse economic capacities. While the DBM provides a unified structure, local autonomy allows each province, city, and municipality to tailor salaries according to their income class.

If you’re working or applying in an LGU, always verify your salary grade, income class, and implementation rate. Doing so ensures you’re aware of your rightful compensation and helps you make informed career or relocation decisions.