DOLE Secretary Rosalinda Baldoz yesterday announced that the country’s 16 Regional Tripartite Wage and Productivity Boards (RTWPBs) have completed their respective transition plans to the two-tiered wage system.
“The two-tiered wage system is a flagship reform of the DOLE under the current minimum wage policy consisting of a mandatory minimum wage to protect the poor and vulnerable workers, and a voluntary productivity-based incentive scheme over and above the minimum wage,” said Baldoz in making the announcement.
A major strategy of the transition plans towards the two-tiered wage system is for the Regional Boards to issue industry-specific advisories to guide enterprises in adopting productivity incentive schemes in order to
drive enterprises and workers in implementing productivity improvement and gain-sharing programs.
“The primary aim of the two-tiered wage is to tighten the link between pay and productivity,” Baldoz said.
Baldoz noted that since the RTWPBs started implementing the reform in 2012, there have been already gradual upward adjustments in those minimum wages that lag behind the poverty threshold to levels higher than the threshold.
“From 37 minimum wage rates in 2011, the number of rates falling below the poverty threshold has been reduced to 19 as of this year,” said Baldoz.
She explained that two RTWPBs–those of the Cordillera Administrative Region and of Region IV-A, have already issued advisories on the adoption of productivity incentive schemes.
“The rest of the Boards have identified priority or growth sectors for which advisories will be correspondingly issued in the next 1-2 years,” she said.
Baldoz further explained that under the two-tier wage system, the minimum wage shall be set above the poverty threshold to help workers meet basic needs and reduce poverty.
“We are conscious that the reform must ensure that minimum wages will not exceed average wage so as to broaden the space for bi-partite approaches to setting the terms and conditions of employment,” she clarified.
Secretary Baldoz envisions that the reform will result to positive outcomes, such as greater predictability and stability in wage determination; minimum wages above the poverty threshold; tighter link between wages and productivity; simplification of wage structures; bring minimum wages between poverty threshold and average wage close; and improve compliance among enterprises.