Labor and Employment Secretary Rosalinda Dimapilis-Baldoz, Chairperson of the National Wages and Productivity Commission (NWPC) yesterday announced a new pay raise for over half-a-million minimum wage earners—587,000—in NCR, the 19th such increase in minimum wages since R.A. 6727, or The Wage Rationalization Act, became a law on 9 June 1989, and the fifth such minimum wage pay hike under the administration of President Benigno S. Aquino III.
Secretary Baldoz made the announcement after DOLE-NCR Regional Director Alex Avila reported to the labor and employment chief that the Regional Tripartite Wages and Productivity Board-National Capital Region (RTWPB-NCR) has approved a resolution granting a P15 increase in the daily basic minimum wage and continuing a P15 Cost of Living Allowance in effect since January 2014.
“The new minimum wage in the National Capital Region has been raised to P481 for workers in the non-agriculture sector and P444 for workers in the agricultural sector. The minimum wage hike is expected to be affirmed by the NWPC this week, and the RTWPB will publish it, after which it will take effect 15 days after its publication,” Avila said in his report.
Avila is the chairperson of the RTWPB-NCR.
In issuing a new minimum wage in the NCR, Director Avila said the RTWPB—composed of representatives of labor and management, and the government, specifically the Department of Trade and Industry, National Economic Development Authority, and the DOLE—took into thorough consideration several factors, including the erosion in the minimum wage, inflation rate, possible impact of the minimum wage adjustment on prices of goods and services, as well as on employment; movements in the consumer price index, the current economic condition in the region, employers’ ability to pay, and the results of its continuing studies, sectoral consultations, and public hearings.
“The decision of the RTWPB-NCR to adjust the minimum wage was consistent with the government’s policy of granting regular, moderate, and predictable minimum wage adjustments, taking into consideration the needs of workers and their families, as well as the need to maintain stability in the business environment within the framework of the two-tiered wage system reform which Secretary Baldoz has initiated in 2012 and which we accelerate to implement,” said Avila.
He said the P15 increase in the minimum wage will directly benefit 587,000 minimum wage earners who also would continue to be exempted from paying income tax on their wage and on their hazard pay, holiday pay, night shift differential, and overtime pay.
“The take-home pay of our minimum wage earners will increase to P492.57 per day, or by 3.2 percent because of the wage hike, compared to the current P477.03 per day. They will also enjoy a higher 13th month pay and increased social security coverage,” Avila said.
“On the part of the employers, their effective labor cost per employee working six day a week will also increase by 3.2 percent, or P565.54 per day, compared to the current P547.87 per day,” he added.
He expressed confidence that like in the past year, employers will be able to bear the cost of the increase without hampering their viability for growth and expansion and, therefore, their ability to sustain employment creation.
“In January 2014, when the second tranche of the minimum wage increase consisting of the integration into the basic minimum wage of the P15 of a P30 COLA granted by the RTWPB-NCR in October 2013 took effect, employment was at 88 percent, unemployment was at 11.2 percent, and underemployment was at 12.1 percent. Today, employment in the NCR is at 90.7 percent; unemployment is at 9.3 percent; and underemployment is at only 8.3 percent. So, we see that this significant improvements in these economic indicators will not be affected by the new minimum wage order, but instead continue until the end of the year and beyond, barring any glitches in the horizon,” Avila explained.
He further said that with the increase, the RTWPB was able to maintain the near-to-the ideal ratio of the minimum wage to average wage, which is 40 to 70 percent, at 75 percent, down from 80 percent when the current administration came to office in 2010.
“The applicable minimum wage-to-average wage ratio for the country is not too close, to allow for bipartite approaches and flexibility in plant-level negotiations for further benefits,” he said.
In this latest minimum wage pay hike, Avila noted another bright note: the removal from the list of establishments that may apply for exemption from the wage order, in accordance with rules and regulations and following compliance with documentation and other requirements, of establishments whose total assets—including those arising from loans, but exclusive of the land on which the establishments’ offices, plants, and equipment are located—are not more than P3 million.
“They are no longer included in the list of establishments that may apply for one year exemption. Only distressed establishments, retail/service establishments regularly employing not more than 10 workers; and establishments adversely affected by natural calamities may apply for exemption and as determined by the RTWPB-NCR,” Avila said.
Baldoz instructed Avila to mobilize the DOLE-NCR’s corps of labor laws compliance officers and the Labor Communications Office to disseminate information on the new wage order, raise public awareness and understanding, and educate workers and employers to encourage voluntary compliance.
It can be recalled that prior to the new minimum wage order, the RTWPB-NCR had received two petitions for an across-the-board daily wage increases. The first petition was filed by the Association of Minimum Wage Earners & Advocates (PTGWO-AMWEA) TUCP–ITUC last 28 November 2014 seeking for a P146.80 across-the-board daily wage increase, while the second petition was by the TUCP, filed on 6 March 2015 seeking for a P136.00 across- the-board daily wage increase.
Aside from its continuing studies and researches, the RTWPB-NCR conducted three public consultations last 29 January with the labor sector; on 10 February with the management sector; and on 17 February with the government sector. It also conducted a public hearing on 6 March to ensure hearing broad views and perspectives and to elicit participation of the social partners and key stakeholders.
“Unfortunately, the RTWPB is not mandated to set across-the-board wage increases. Our mandate is to set minimum wages,” the Board said when it took note of the petitions and when it suggested that the petitioners conform to the standards/criteria prescribed by law in their subsequent petitions.