Strengthen the regional wage boards
Corporate Securities Info

Strengthen the regional wage boards

/ 02:07 AM February 20, 2024

In light of the country’s present high inflation rate, several bills had been filed in Congress that aim to increase the daily minimum wage in the private and public sectors.

At the House of Representatives, a bill proposes to give a P150 increase, while another seeks a P750 across-the-board minimum daily wage for private sector workers and P33,000-a-month entry wage for government employees.

At the Senate, a bill increasing the daily minimum wage in the private sector by P100 was recently approved on second reading. If that bill is passed on third reading, it would be sent to the House for approval.


With regard to government workers, any increases in their minimum wages would have to be sourced from the annual national budget, depending on the availability of funds.


For workers in private businesses, any upward adjustments in their take home pay would have to be drawn from the pockets of their employers.

Unless they’re able to secure exemption from the Department of Labor and Employment from giving that increase, the employers have no choice but scrounge for the money needed to enable them to comply with the mandated wage hike.

The P100 increase in the Senate bill had been described as a “catastrophe” by the Employers Confederation of the Philippines (Ecop). It warned that the proposed increase would cause the prices of goods to go up or force small businesses to lay off some of their staff so they can pay higher wages.

READ: Senate-approved P100 wage hike is ‘better than nothing,’ says NAPC

Stung by Ecop’s strong statements, Senate President Miguel Zubiri, the principal author of the bill, called on the group’s large corporation members to “moderate their greed.”

Citing the laws that reduced taxes on micro, small and medium scale enterprises, he said “the business sector has enough buffer to absorb the cost of the wage hike.”


If any of the bills increasing the minimum wage in the private sector is enacted into law, it would result in the repeal (expressly or impliedly, depending on the wording) of the 35-year-old Wage Rationalization Act (or Republic Act No. 6727), which provides for the creation of regional tripartite wages and productivity boards in all regions that are tasked with fixing the statutory minimum wage in their areas.

In setting that wage level, the boards have to take into consideration, among others, the needs of the workers and their families, a fair return of the capital invested and employers’ capacity to pay.

The premise of the law is there is no one-size-fits-all minimum wage for all workers in the Philippines. It recognizes that the cost of living in Metro Manila is not the same as in, for example, Cebu City or second-class municipalities in Mindanao.

Thus, the minimum wages may vary from region to region depending on the criteria laid down by the law in determining those amounts.

The regional wage board approach had been opposed by labor unions because of the strict requirements that have to be complied with to justify any petitions for upward adjustment of the minimum wage.

Its saving grace, however, is that changes in the minimum wage can be done through an administrative process rather than by way of legislation which, as events in the past had shown, was long-winded and influenced by the political atmosphere prevailing at the time of their deliberation.

Verily, there is no compelling need to reinvent the wheel, so to speak, on the issue of minimum wage. Since that pay level would have to be adjusted from time to time in the future depending on the state of the country’s economy, it is more expedient to make the adjustments through the regional wage boards.

If the criteria set by the existing law do not meet the objective of easing the financial hardships of minimum wage earners, then change them.

The point is, the regional boards provide a more efficient way of addressing the issue of minimum wages so strengthening them, rather than setting a nationwide statutory minimum wage, would be in the workers’ best interests in the long run. INQ

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TAGS: Business, CSI, wage hike

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