1. Wage and Productivity Policy and Programs

2. Minimum Wage Setting

3. Wage Rationalization Act
Regional minimum wage fixing
Institutional mechanisms
NWPC – central coordinating body
RTWPBs – set minimum wages
Criteria
Needs of workers and their families
Employers’ capacity to pay
Prevailing wages
Requirements of social and economic development
Frequency – annual
Duration – 12 months

4. Minimum wage setting
Regular, moderate and predictable wage adjustments
Stable business planning horizon
Not inflationary
Coherent with BSP’s inflation target

5. Two-Tiered Wage System
Protect vulnerable workers from undue low wages
Increasingly link wage and productivity growth
Employers’ right to fair and reasonable profits
Workers’ share in the fruits of production
The two-tiered system consists of a regional floor wage that is:
For the vulnerable (new entrants and unskilled) or low-paid workers
Higher than the poverty threshold but significantly lower than the average wage
Mandatory and shall issued in the form of a Wage Order
The second tier is a productivity-based wage system :
For adjusting wages above the floor wage
Promote productivity and gainsharing

6. Two-Tiered Wage System
TIER 1 - Minimum Wage
Vulnerable or low paid workers
Higher than the poverty threshold but lower than average wages
Mandatory
TIER 2 - Productivity-based incentive system
All workers
Tighten the link between wage and productivity
Advisory, not mandatory
The two-tiered system consists of a regional floor wage that is:
For the vulnerable (new entrants and unskilled) or low-paid workers
Higher than the poverty threshold but significantly lower than the average wage
Mandatory and shall issued in the form of a Wage Order
The second tier is a productivity-based wage system :
For adjusting wages above the floor wage
Promote productivity and gainsharing

7. Daily Minimum Wage Rates in Agriculture by Region, Philippines: April 2018
Source of data: National Wages and Productivity Commission/RTWPBs

8. Daily Minimum Wage Rates in Non-Agriculture by Region, Philippines: April 2018
Source of data: National Wages and Productivity Commission/RTWPBs

9. Number of Minimum Wage Categories by Region: as of March 2018
Source: National Wages and Productivity Commission/RTWPBs

10. Number of Minimum Wage Rates by Region: as of March 2018
Total: 75
Source: National Wages and Productivity Commission/RTWPBs

11. As floor wage, minimum wage should be about 70% of average wage
Region
Highest MW
Average Wage
Ratio of Highest MW to Ave. Wage (%)
Phils 80
NCR
512
708 72
CAR
300
471 64 I
310
370 84 II
340
387 88
III
380
441 86
IV-A
378.50
509 74
IV-B
343 87 V
290
360 81 VI
323.50
400

12. As floor wage, minimum wage should be about 70% of average wage
Region
Highest MW
Average Wage
Ratio of Highest MW to Ave. Wage (%)
VII
366
431 85
VIII
285
345 83 IX
296 81 X
338
405 84 XI
340
420
XII
295
407 73
XIII
300
411
ARMM
265
373 71

13. Limitations Imperfect coverage Exemption BMBE law Non compliance
Distortion
Enforcement /administration
Limited number of compliance officers
Complex wage orders (e.g. Region IVA)

14. Towards sustainable minimum wage policy
Continuous simplification of wage structures to facilitate compliance and administration
Categories down from 90 in 2016 to 73 at present
Number of MWRs down from 90 in 2016 to 75 at present

15. NATIONAL CAPITAL REGION: March 2018
MW /AW 72%
SIMPLE
Average
Wage
Poverty
Threshold
CALABARZON: March 2018
MULTIPLE RATES AND CATEGORIES
Poverty
Threshold
No Minimum wage rates below PT
Average
Wage

16. Towards sustainable minimum wage policy
Set at levels:
Not lower than PT to help workers and families meet basic needs
Without approaching average wage so as not to crowd out bipartite negotiations and to ensure that minimum wage earners are not left too far behind compared to \other workers
Allows exemption to provide temporary relief to business enterprise and prevent job loss

17. Wage Structure, DAVAO REGION: March 2018
PT<MW<AW
Average
Wage
Poverty
Threshold
Wage Structure, WESTERN VISAYAS: March 2018
MW<PT<AW
No Minimum wage rates below PT
Average
Wage
Poverty
Threshold

18. Towards sustainable minimum wage policy
Allows exemption to provide temporary relief to business enterprise and prevent job loss

19. Regions With and Without Exemption Provisions in Wage Orders: March 2018
CAR
IVB V
VII
VIII XI
XII
NCR I II
III
IVA VI IX X
XIII
Source: National Wages and Productivity Commission/RTWPBs

20. Regions with Exemptible Categories in Wage Orders: as of March 2018
Source: National Wages and Productivity Commission/RTWPBs

21. Towards sustainable minimum wage policy
Based on empirical data
CPI, poverty threshold, average wage, gross regional domestic product, labor force, etc
Ensures broad consultation of stakeholders
Requires the conduct of a public hearing prior to issuance of a WO
Strong tripartite presence

22. Outcomes Does not create inflationary pressure
Difference in amount, timing and form
Moderate and predictable increases; recovery of purchasing power
Targets minimum wage earners only
Coherent with fiscal and development policies (e.g. inflation targets, Chapter 10 of PDP cites strengthening of efficacy of MW policy as one of the strategies to improve income earning abilities)

23. Outcomes No evidence of any negative impact on employment
Does not crowd out space for bipartite approaches in adjusting wages including schemes based on performance or productivity

24. Promoting Productivity Improvement

25. Linking wage and productivity growth
Productivity improvement should lead to commensurate growth in wages and reasonable returns to investments for expansion and growth
Promote inclusivity in growth
Contribute to the attainment of PDP labor productivity growth target of 3% - 4% for the industry sector and 4% - 5% for the services sector

26. To date, the Boards have trained 378,046 workers in 134,426 enterprises in various productivity technologies
Productivity Toolbox
Positive work values
Basic business processes
Good housekeeping (7S)
Problem solving
Error recovery
Lean management
Green technologies
Service quality

27. Firms and Workers Trained in Productivity Improvement

28. Building capacities of workers & enterprises
Productivity Olympics
Award system to showcase and recognize best practices
54 national winners to date
Technical assistance in designing performance or productivity based incentive schemes
19 Advisories issued by the Boards
Almost 2,000 firms assisted since 2013