PH now in transition to two-tiered wage system--Baldoz

Date Posted: May 15th, 2012 12:00 AM

With the effectivity of the Regional Tripartite Wage and Productivity Board-Region IV-A's Wage Order No. 15 today covering all workers in the CALABARZON region, the Philippines joins its progressive ASEAN neighbors in the implementation of the two-tiered wage system, Labor and Employment Secretary Rosalinda Dimapilis-Baldoz said.

"The Philippines is definitely in transition to a two-tiered wage system which offers better protection to minimum wage earners, ensures better viability of enterprises, recognizes and rewards productivity and performance, and strengthens collective bargaining," said Baldoz.

Referring to Wage Order No. 15 of the RTWPB IV-A, the first regional wage order that provides for a wage increase under two-tiered wage system, Baldoz pointed out that a productivity-based wage system is central to Republic Act 6727, or the Wage Rationalization Act, saying that even Barangay Micro Business Enterprises (BMBEs) will benefit from the two-tiered system because a "productivity-based wage does not exempt any industry".

The two-tiered wage system consists of a fixed “floor wage”, or entry-level wage, for new entrants and low-skilled workers, and a flexible wage above the floor based on worker productivity and industry or enterprise performance which may be negotiated between the employer and the workers.

The ground-breaking wage reform, initiated by Secretary Baldoz, seeks to upgrade and modernize the existing minimum wage setting in the country. It aims to minimize the unintended outcomes of mandated minimum wages, improve the coverage of the vulnerable sectors, and promote productivity improvement and gain-sharing. Its implementation has been endorsed and is supported by the National Tripartite Industrial Peace Council.

Wage Order No. 15 sets the regional floor wage at P255.00, with a conditional temporary productivity allowance (CTPA) of P12.50 for workers already receiving more than P255.00.

The floor wage of P255 under the first tier requires an additional amount of P2.00 to P90.00 per day over the minimum wage levels that are currently below P255. It was computed taking into account the current poverty threshold, average wage, and the regional socio-economic condition.

Under the new wage order, the adjustments in current minimum wage level shall be as follows: (a) in non-agriculture sector, the lowest minimum wage level of P253 in 2011 will increase to P255 in 2012; (b) in agriculture sector, from P213 to P250 to a range of P231 to P255; and (c) in retail and service establishments with 10 workers or less, from P165 to P232 to a range of P183 to P208.

“The adjustments will be done in tranches from 2012 to 2016 so as not to burden enterprises with the abrupt and huge wage increases, such as those requiring a P90 per day adjustment. Within a five-year period, the lowest minimum wage in each sector will be adjusted to the floor wage of P255,” Baldoz explained, adding:

"The P12.50 CPTA, under the second tier, represents contributions of the workforce to the growth of regional economy from 2010 to 2011."

Baldoz further explained, however, that the CPTA shall only be paid to private sector workers who are already receiving higher than the floor wage of P255, and to those employed in enterprises which have not yet established Productivity Improvement and Incentives Committees (PIICs).

“The second tier in the wage order is temporary in nature, but it calls for the creation of PIICs in every workplace. The PIICs will determine performance parameters, coverage, and the productivity-based pay to be given to the workers,” she said.

“Through the PIICs, labor and management will be able to jointly pursue higher and sustainable levels of productivity, output, and competitiveness which will all significantly contribute to the creation of a business environment conducive to investments, employment, and growth,” Baldoz assured.

To benefit primarily from the establishments of PIICs are the 34 export processing zones (EPZs) currently operating in the region, to wit: Cavite, with nine 9 EPZs; Laguna, 17 EPZs; Batangas, 7 EPZs; and Rizal, one EPZ.

The CALABARZON region is the first region in the country to pilot-run the two-tier wage system.

END
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