Labor and Employment Secretary Rosalinda Dimapilis-Baldoz, Chairperson of the National Wages and Productivity Commission (NWPC), yesterday noted the support of the Employers Confederation of the Philippines to the DOLE’s two-tiered wage system (TTWS) reform, which said the reform has led to the expeditious and non-adversarial consensual decision-making process in the Regional Tripartite Wages and Productivity Boards (RTWPBs).
Commenting on a letter she received from ECOP President Edgardo Lacson on the newest minimum pay raise in Metro Manila which took effect this month, Baldoz said the ECOP has credited the two-tiered wage system for “introducing the most critical criterion in the reform, which was the use of the poverty income threshold in the first tier as a major indicator in setting the floor wage.”
“The best example of this is in the NCR,” said Lacson in his letter. “As it is, the NCR wage rate of P466 per day (was) double the NCR 2012 poverty threshold of P234 per day.
Lacson also said, without elaborating, that since its implementation, the two-tiered wage system has seen a “significant reduction in the politics of wage fixing”.
The TTWS, initiated by Secretary Baldoz in 2012, is a wage reform where the first tier is the mandated minimum wage, or floor wage, set by RTWPBs, while the second-tier is the non-mandatory component that provides workers’ pay increases and benefits based on productivity-based formulas contained in advisories also issued by the RTWPBs. The advisories guide industries in developing and implementing productivity improvement programs, productivity-based incentives, and profit- or gain-sharing schemes that workers and employers agree as basis for additional pay or incentives.
Under the reform, the minimum wage is viewed as a social safety net, as it is, to protect the most vulnerable sectors, while the productivity-based pay is regarded as the more appropriate mechanism of rewarding workers’ productivity as their progressive contribution to enterprise growth and competitiveness.
Relative to this, NWPC deputy executive director Patricia Hornilla said the ECOP will meet with the NWPC this week in a technical working group to map out support strategies by the employers’ group on advocating the TTWS more extensively with employers. Separate meetings are also planned for the unions.
“We need the support of the ECOP and the unions in raising knowledge and awareness that would lead to practice of the TTWs. This is a reform that everyone should embrace because it is appropriate for our current economic and labor market conditions,” Baldoz said.