IN a period of more than three years, the minimum wages of workers in the private sector have not changed. The last minimum wage adjustment was in December 2019, issued by the regional board of BARMM. For the National Capital Region, the last wage order was issued in November 2018.
During the pandemic, the workers recognized that the most important priority was to survive the pandemic and, therefore, did not petition the regional tripartite wage boards for an increase in minimum wages. From 2019 to 2021, the workers’ priorities were to stay healthy and to help in the economic recovery efforts. For those who lost their jobs, albeit temporarily, the search for new sources of income was their utmost concern.
The Covid-19 pandemic, at least for now, seems to be ebbing, and more workers are returning to work. The workers now realize that their wages are no longer enough as, even during the pandemic, the rise in the cost of goods and services did not abate. It is for this reason that many trade union organizations have now filed petitions with the Regional Tripartite Wage and Productivity Boards (RTWPB) for an increase in the minimum wages.
For every region, the RTWPB is composed of the Department of Labor and Employment’s regional director as chairperson, the regional directors of the National Economic and Development Authority and the Department of Trade and Industry as vice chairpersons, two representatives of the employers and another two representatives of the workers.
More and more workers are losing their trust in the system of fixing wages by the tripartite boards. They perceive too many deficiencies and inadequacies in the minimum wage fixing machinery, its process and system.
The legal mandate of the RTWPB is to “determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the corresponding wage orders, x x x”
In the exercise of this mandate, the RTWPB rules and regulations provide the “standards/criteria” for minimum wage fixing.
In Section 2, chapter III of the rules, the boards are mandated to fix minimum wages that “shall be as nearly adequate as is adequately feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the workers within the framework of the national economic and social development program.”
The rules and regulations of the RTWPB provide certain criteria which should be considered by the wage boards in making a decision on minimum wage increase petitions. These are:
- The demand for a living wage;
- Wage adjustments vis-à-vis the Consumer Price Index;
- The cost of living;
- The needs of the workers and their families;
- The need to induce industries to invest in the countryside;
- Improvements in the standard of living;
- The prevailing wage levels;
- Fair return of the capital invested and the capacity of employers to pay;
- Effects on employment and family income; and
- The equitable distribution of income and wealth along the imperatives of economic and social developments.
At a glance, these guidelines are very laudable. On closer scrutiny, however, these guidelines are at best unworkable and at worst, unreliable.
I had the privilege of talking to a former commissioner of the National Wages and Productivity Commission, Mr. Cedric Bagtas, who was appointed as a representative of labor. He is a professor of labor economics and currently the general secretary emeritus of the National Trade Union Center (NTUC). The problem, he said, is that many of these criteria are not quantifiable and therefore very difficult to operationalize in the determination of the minimum wages.
Take the “cost of living criterion” for example, he told me. This criterion is determined by the inflation rate which changes day by day or month to month. Even as the Wage Boards are deliberating, the movement of prices keeps moving upwards and never downwards. When the wage order is issued, the amount of increase may no longer be enough to cover the increase in the cost of living due to inflation.
Even the criterion that the wage increase should meet “the needs of workers and their families” is a movable goal. The needs of workers change. The pandemic has illustrated this. Before the pandemic, the workers did not need to buy face shields, face masks, alcohol and other disinfectants. Those with children in school unexpectedly had to spend for devices that remote learning required, e.g., computers and internet connectivity.
The Wage Boards must also assure the employers of a fair return on their investments and should take into consideration their capacity to pay. A “fair return on investment” is a matter that can only be approximated and certainly not capable of exact mathematical demonstration. Besides, what may be fair to one employer may not be fair enough for another employer.
Mr. Bagtas sees the need for an urgent review of the law on minimum wages, as many workers are excluded from its coverage. Micro enterprises employing less than 10 workers and barangay micro enterprises, regardless of the number of their employees, are excluded from the coverage of any minimum wage orders. He further notes that the process, through which petitions for minimum wage increases are decided by the wage boards, takes more than 90 days to complete. The wage order may still be appealed to the National Wages and Productivity Commission. The effectivity of the wage increase is, however, not suspended.
Another major problem is with regard to the enforcement of wage orders. There are business establishments which pay workers’ wages below the minimum value fixed by the Wage Boards. Compliance by some employers is secured only through labor inspections.
The Department of Labor and Employment has 1,200 labor inspectors who are now called labor law compliance officers. Inspections of establishments are conducted either on the initiative of the department or in response to requests from workers.
Labor inspections are conducted to determine whether establishments comply with safety and health labor standards provided by law, and with the minimum wage orders.
There were 957,620 establishments in the country in 2020, according to the Philippine Statistics Authority. The number of the inspectors certainly is not equal to the task of inspecting this number of businesses for their compliance with labor standards or with minimum wage orders.
The move to review and revamp the process of fixing minimum wages and the enforcement of wage orders is gaining momentum among the workers and their organizations. Replacing the minimum wage fixing machinery and process with a more efficient one is the task of the legislature. Workers hope that candidates who will be elected as senators and members of the House of Representatives in the upcoming May national election will prioritize bills to amend the wage and productivity law.
For after all, labor matters.