Labor and Employment Secretary Rosalinda Dimapilis-Baldoz yesterday said that minimum wage earners in eight of the country’s 16 regions received increased minimum wage pay in 2013 with the issuance by their respective Regional Tripartite Wage and Productivity Boards (RTWPBs) of new wage orders, while three regions are already implementing the guidelines on productivity-based pay schemes in pursuance of the two-tier wage system.
“In 2013, eight RTWPBs issued new wage orders granting increases to minimum wage earners either in basic pay or cost of living allowance (COLA). On the other hand, the wage boards of the Cordillera Administrative Region, Regions III, and 4-A have been implementing their guidelines issued in the form of advisories, on the operationalization of productivity-based pay schemes towards a two-tier wage system,” said Baldoz, adding that workers in these regions can now improve their skills and capabilities through participation and involvement in Productivity Improvement Programs (PIPs) or similar initiatives.
The RTWPB in Region 5 was the latest to issue a wage order. On 5 December 2013, RTWPB No. 5 approved Wage Order RTWPB-V No. 16, granting an P8.00 increase to the P252 minimum daily basic pay of private sector workers in the said region. The wage order was published in the Bicol Mail on 27 December 2013.
The new daily minimum wage of P260 in Region 5 took effect on 11 January 2014.
The other RTWPBs which approved wage orders in 2013 were those of the National Capital Region (NCR), Regions 2, 6, 9,10, and 13, and Caraga.
Baldoz said all eight new wage orders encourage labor and management in their workplaces to adopt productivity improvement schemes that will enhance the quality of life of workers. The productivity improvement schemes may include good housekeeping; time and motion studies; quality circles; and labor and management cooperation. The wage order also urges labor and management to adopt and implement gain sharing and other performance incentive programs.
The labor and employment chief said the Cordillera Administrative Region and Region 3 have already issued their advisory on the Implementation of Tier Two, or the Productivity Based-Pay Scheme in 2013, while the RTWPB of Region 4-A (Calabarzon) takes the distinction of being the first to issue an advisory in 2012. The advisories serves as a guide to enterprises that may want to initiate Productivity Based- Pay Schemes.
Through the advisories, the Regional Tripartite Wage and Productivity Boards of CAR, Regions 3, and 4-A encourage labor and management to study the regional background information, such as industry situationers and outlooks, growth rates in labor productivity, labor market conditions, business expectations, industry-specific recommendations and other parameters and evaluate their respective positions in the bi-partite sessions which will jointly implement the productivity incentives program.
The said advisories also contain industry outlook on priority or growth industries which show overall positive business results and, therefore, are viable to adopt productivity-based pay schemes or tier two of the wage reform system. The advisories urge companies to adopt productivity-based strategies not only for the benefit of their workers, but also for the attainment of a more productive business operation.
As provided in the advisories, companies adopting the tier two of the wage reform system shall create a committee to be called Productivity and Incentive Committee (PIC), preferably with equal representation from the workers and management, to design the productivity-based incentive scheme.
Labor and management are also encouraged to forge a commitment to work improvement processes, such as adoption of new technologies and innovation; with management spearheading the productivity drive, and workers supporting improvements in work processes as a way to sustain productivity.
The advisories also state that if a company has an existing committee performing the same or similar function, the existing committee may be retained. In designing a productivity-based incentive scheme, the PIC may use the following criteria related to work performance for giving incentives: (1) innovativeness; (2) love of work; (3) quality of work; and (4) attendance and punctuality.
The advisories provide that existing practices of companies, like gratuities or incentives for best performing employees, may already take the form of tier two, but these may be improved or enhanced. It also provides that productivity-based incentives given to workers take the form of gratuity and not part of wages.
These are rewards given to deserving workers for their productive performance or good behavior which contributed to the attainment of the company’s goals and objectives. Granting these incentives to deserving workers is dependent upon the fulfillment of conditions or requirements agreed upon.
On the part of the RTWPBs, they shall provide capacity building and consulting services, especially to micro, small, and medium enterprises in designing quality and productivity improvement programs and gain-sharing schemes through Work Improvement Measurement Studies and the conduct of productivity training programs, such as the 5S of Good Housekeeping, ISTIV modules, and green productivity.
Baldoz said she expects more RTWPBs to issue advisories and those pending guidelines of other RTWPBs on the productivity-based pay schemes approved this year.
“The National Wages and Productivity Commission (NWPC) is currently assessing the advisories on the implementation of productivity-based incentive scheme submitted by the other Regional Boards. Upon approval of the Commission, these advisories shall be issued and implemented,” said Baldoz.
The second of the two-tiered wage system is voluntary for adoption and implementation of enterprises and is based on the recognition of the value of contribution of workers in the overall improvement of business, including labor productivity and good behavior, among others.