MANILA, Philippines—After recent consultations with its tripartite partners, the Department of Labor and Employment (DoLE) is proposing the adoption of a two-tiered system of wage determination to do away with the negative effects of the current system of minimum wage setting.
The existing system is vulnerable to inflation and unemployment, increases informality, distorts pay structures, weakens incentive for collective bargaining, and discourages pay-for-performance schemes, said Executive Director Ciriaco Lagunzad III of the National Wages and Productivity Commission (NWPC), an attached agency of the DoLE.
Under the proposal, the first tier is a mandatory national wage, or a floor wage. This should protect the incomes of the most vulnerable sectors from undue low wages, Lagunzad said.
The second tier above the national floor is productivity-based. This seeks to encourage improved work performance, remove the disincentive for collective bargaining, and promote bipartite modes in determining wages and other terms and conditions of work.
Under the current minimum wage setting system, the Regional Tripartite Wages and Productivity Boards (RTWPBs) adjust minimum wages on the basis of either a wage petition filed or motu proprio (on its own). Before decisions are made, the RTWPBs conduct a series of multi-sectoral consultations and public hearing to determine the effect of a wage adjustment on all sectors.
Trends or patterns in key socio-economic indicators, needs of workers, and capacity of employers to grant wage increases are likewise among the factors being considered by the RTWPBs in deciding on wage increases.
Lagunzad explained that the RTWPBs are tripartite in composition, with majority of the employers’ and workers’ representatives coming from the Employers’ Confederation of the Philippines (ECOP) and the Trade Union Congress of the Philippines, respectively, the two being the largest and dominant sectoral organizations.
He said the seven wage orders issued so far by the RTWPBs this year were based on the petitions filed with concerned regional wage boards. The amounts of wage increase across regions vary: P22 in Metro Manila, P15 in Region 6, P13 in Region 10, P21 in Region 11, P10 in Caraga, and P12 in Autonomous Region in Muslim Mindanao. The new minimum wage of P404 in Metro Manila took effect on July 1, 2010. –INQUIRER.net
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