Baldoz: PHL now in transition to two-tiered wage system

May 15, 2012 10:35 pm 

MANILA, May 15 — The Philippines has joined its progressive neighbors in the implementation of the two-tiered wage system with the effectivity of the Regional Tripartite Wage and Productivity Board-Region IV-A's wage order, according to Department of Labor and Employment Secretary Rosalinda Baldoz.

"The Philippines is definitely in transition to a two-tiered wage system which offers better protection to minimum wage earners," Baldoz said.

Baldoz was referring to Wage Order No. 15 of the RTWPB IV-A, the first regional wage order that provides for a wage increase under the two-tiered wage system.

She said a productivity-based wage system is central to Republic Act No. 6727, or the Wage Rationalization Act, adding that even Barangay Micro Business Enterprises (BMBEs) will benefit from the two-tiered system.

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 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, with a conditional temporary productivity allowance (CTPA) of P12.50 for workers already receiving more than P255.

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 said.

The CALABARZON region, composed of Cavite, Laguna, Batangas, Quezon and Rizal provinces, is the first region in the country to pilot-run the two-tier wage system. (PNA) DCT/scs/jmc

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