Overview:
A presidential memo on a temporary pay cut has stirred employee stress just before the holidays — but Senate leaders say the warning is unnecessary as budget approval is expected soon.
By: L.N. Reklai & Laurel Marewibuel
“There is no need to make people panic,” Senate Vice President Dr. Stevenson Kuartei said, responding to a memo from the Office of the President that warned national government employees they may temporarily shift to a 72-hour pay period unless the FY 2026 budget is passed soon.
The memo, issued Thursday, Nov. 27, informed employees that limited funding under the current Continuing Budget Authority — capped at 25% of the FY 2025 budget — cannot sustain full payroll costs, especially following the 10% salary increase that took effect Oct. 1 under RPPL 11-40. Under the directive, staff would continue to work 80 hours per pay cycle but be compensated for only 72 hours until the budget is approved. Employees are expected to receive retroactive pay later.
Kuartei called the action premature and said lawmakers expect to pass the budget this week. Senate President Hokkons Baules shared the same view, adding that there is enough money to maintain salaries while deliberations are underway. “We are all working hard to ensure that the budget passes as soon as possible,” Baules said.
Employees distressed, blindsided by timing and communication
Despite assurances from the Senate, the memo triggered frustration and anxiety among employees who fear the reduced pay period will hit hardest during the holiday season.
“They’re asking us to keep working the full 80 hours but only pay us for 72,” one employee said. “My budget is already tight. It will be even harder to make ends meet and ensure my kids enjoy Christmas. Clearer communication about why this is happening and how it will affect us would have helped everyone prepare.”
Others echoed similar concerns about unclear messaging and what they view as unfair burdens placed on workers while leadership disputes play out.
A management-level employee said the reduced pay complicates an already tight cost-of-living reality. “Losing a day’s pay makes it incredibly stressful, especially around the holidays,” he said, noting the memo did not clearly state whether workers could refuse the unpaid hours. “It feels like a political move, announced right before Christmas, while we’re left to explain it to our staff without guidance.”
Another employee described the decision as demoralizing. “We are expected to do full-time work with only 90% pay,” she said. “This will hit families hard — financially and mentally.”
Budget delay now tied to political pressure
The pay-cut warning resurfaced long-standing tension between the OEK and the President’s Office over the stalled FY 2026 budget.
President Surangel Whipps Jr. has repeatedly blamed the Senate for requesting additional information and prolonging review, while Senate leaders say the House of Delegates — which holds budget authority this cycle — contributed to delays through travel and lack of urgency, resulting in what Baules described as a 55-day standstill after the CBA was implemented.
A former lawmaker familiar with Palau’s political strategy said the pattern is familiar. “This approach delays the budget as late as possible, then uses public pressure to push through the preferred version,” he said. “We saw this in the last four years — the House delayed, pressure mounted, and the Senate eventually gave way.”
This year, both chambers publicly say they expect to finalize the budget within days. But with workers already reacting to the pay-cut notice, the memo has shifted pressure back onto the OEK to deliver — and soon.While the focus is on timing, observers note that the true outcome will hinge on which chamber’s version survives negotiation. Passage may end the payroll uncertainty, but it will also reveal who wins this round of political leverage.
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