1. In recent months, bills proposing a nationally legislated across-the-board wage increase for workers in the private sector, ranging from Php 100.00 per day to Php 750.00 per day, have been filed and deliberated in both houses of Congress. These bills seek to amend or repeal the current system of increasing wages for employees in private establishments, which Congress established in 1989 through Republic Act No. 6727, otherwise known as the Wage Rationalization Act.

2. In the current system, Congress delegated the power to adjust minimum wages at the regional level with the participation of representatives of workers and employers to the Regional Tripartite Wages and Productivity Boards (RTWPBs). The process is under the supervision of the National Wages and Productivity Commission (NWPC), which is an agency attached to the Department of Labor and Employment (DOLE). In 2013, Congress passed Republic Act No. 10361, otherwise known as the Batas Kasambahay. Under this law, the RTWPBs now have the mandate to set minimum wages for domestic or household workers.

3. The DOLE has been invited to participate in the Congressional deliberations on the proposed increases and has made its position clear. First, DOLE is the primary agency in the executive branch mandated to implement and execute labor laws. It is its function and duty to ensure that minimum wage adjustments are made in accordance with the current wage system established by Congress. Second, DOLE’S role in the Congressional deliberations is as a resource person. As part of the executive branch of government, it is the DOLE’s Constitutional duty to provide, appear before and be heard by Congress on a matter pertaining to its mandate, and for this purpose submit its technical inputs in aid of legislation. It is Congress which has the sole power to make law. The DOLE is not in a position to restrict the exercise of this power, much less reject it. And third, having provided its inputs, the DOLE defers to the primary authority and wisdom of Congress to enact, amend or repeal any law. Should Congress decide to amend or repeal Republic Act No. 6727, the DOLE’s duty will be to implement the law no matter how hard that will be.

4. The policy objective of Republic Act No. 6727 is “to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.” It created the RTWPBs to serve as a regular mechanism to periodically review and adjust the minimum wage and ensure that lower-skilled workers and new entrants to the labor force are protected with a floor or baseline rate.

5. Republic Act No. 6727 is not intended to adjust the wages of workers earning above the minimum wage, except only when wage distortions occur as a result of the new minimum wage rates and the parties are unable to correct the distortions by themselves. For workers receiving above the minimum wage, the declared policy of the State, as provided for in the Labor Code, is that wage adjustments should be through collective bargaining with the involvement of trade unions or other enterprise-level mechanisms. Republic Act No. 6727 itself is explicit in maintaining the overall State policy in promoting collective bargaining as the primary mode of settling wages and other terms and conditions of employment.

6. In adjusting minimum wages, the RTWPBs are guided by the general principle that whenever necessary, the minimum wage rates shall be adjusted in a fair and equitable manner, considering existing regional disparities in the cost of living and other socio-economic factors and the national economic and social development plans. They are also guided by the specific objective standards or criteria set by the law, specifically: (i) the demand for living wages; (ii) wage adjustment vis-a-vis the consumer price index; (iii) the cost of living and changes or increases therein;(iv) the needs of workers and their families; (v) the need to induce industries to invest in the countryside; (vi) Improvements in standards of living;(vii) the prevailing wage levels; (viii) Fair return of the capital invested and capacity to pay of employers; (ix) effects on employment generation and family income; and (x) the equitable distribution of income and wealth along the imperatives of economic and social development.

7. The current system embodies principles in minimum wage determination found in Convention 131 on minimum wage fixing of the International Labor Organization (ILO) and practiced in modern economies and industrial relations systems across the world. Among these are: (i) the RTWPBs aim to set a floor or minimum wage to balance basic workers’ needs, continuity of employment and growth of enterprises, leaving adequate space for collective bargaining and enterprise-level mechanisms to increase wages for those receiving above the minimum wage; (ii) democratic participation thru tripartite representation on a matter directly affecting workers and employers; (iii) decentralized structure and decision-making which allows the RTWPBs to consider local conditions; and (iv) technical process of minimum wage determination based on the application of the objective criteria and standards set by law and on empirical data and statistics. The current system also has the added feature of including productivity as a factor in wage determination. In this regard, the 2019 Survey on Business Conditions of Japanese Companies in Asia and Oceania conducted by the Japan External Trade Organization (JETRO) ranked the Philippines as the top country in Asia and Oceania in terms of the appropriateness of the minimum wage mechanism from the perspective of productivity.

8. The DOLE and the NWPC have ensured that the RTWPBs, in performing their wage-setting function, must always balance the needs of workers especially in relation to inflation and rising costs of living, the capacity to pay of employers particularly of MSMEs, and the national development objectives of employment generation, productivity improvement, and sustained overall economic growth. To this end, the RTWPBs have consistently followed a policy of regular, moderate, and predictable minimum wage increases. This policy is supported by the Bangko Sentral ng Pilipinas which has continuously emphasized the need for carefully-calibrated minimum wage adjustments aligned with historical wage increases and productivity improvements to prevent such increases from triggering inflation. This policy has protected workers’ incomes against erosion, allowed enterprises space for growth and expansion, and stabilized the environment for keeping and attracting investors. The DOLE and NWPC, in partnership with the National Economic and Development Authority (NEDA), also continue to ensure that the members of the RTWPBs are able to meaningfully use and interpret relevant socioeconomic and other technical data as basis for their decisions through capacity-enhancement trainings.

9. Consistent with the policy of regular, moderate, and predictable minimum wage increases, the RTWPBs are guided by the general rule that no minimum wage increase shall be issued within one year from the effectivity of the last wage increase in a region. The last round of minimum wage increases took effect between July last year in the National Capital Region to February this year in Region XI, or the Davao region. For this round, all 16 RTWPBs have issued wage orders increasing the minimum wage from Php 30 per day to Php 89 per day. Of the 16 wage orders, ten were initiated motu proprio by the RTWPBs; 15 were unanimously agreed upon by the government, labor and employer representatives while in one wage order, an employer representative agreed to an increase but considered the amount to be too high. The table of increases granted by the RTWPBs in the last two rounds of increases is Annex “1.” In relation to domestic household workers, all 16 RTWBs motu proprio and unanimously, have issued separate wage orders increasing the minimum wages ranging from Php 400.00 to Php 1,500.00 per month (Annex “2”).

10. In most wage orders, the amounts of increases granted by the RTWPBs are higher than the amounts secured by unions through their collective bargaining agreements (CBAs). A sampling of the most recent CBAs that were voluntarily agreed upon by unions and their employers filed with DOLE show that in micro enterprises, the amounts of increase in daily wage rates range from Php 10.00 to Php 50.00; in small enterprises, from Php 1.00 to Php 75.00; in medium enterprises, from Php 1.00 to Php 60.00; and in large enterprises, from Php 1.00 to Php 115.00 (Annex “3,” Table “3.1”). In the last four months, 19 CBAs were settled by the National Conciliation and Mediation Board (NCMB) following a collective bargaining deadlock. The amounts of wage increases exhibit similar patterns. In large enterprises, the amount of daily wage increase is from Php 1.00 to Php 115.00 in manufacturing. In the transport and storage sector, the increase ranged from Php 5.00 to Php 40.00; in agriculture, forestry and fishing, from Php 5.00 to Php 27.00; in wholesale and retail trade, Php 1.50 to Php 30.00; and in education, Php 2.00 to Php 5.00. In medium enterprises, the amount of increase ranged from Php 1.00 to Php 60.00 in manufacturing; in the transport and storage sector, from Php 2.00 to Php 51.00; in agriculture, forestry and fishing, from Php 5.00 to Php 40.00; and in electricity, gas and water, Php 2.00 to Php 30.00 (Annex “3,” Tables “3.2” and “3.3”).

11. During his Labor Day address to the nation, President Ferdinand R. Marcos Jr. called on the RTWPBs to initiate a timely review of the regional minimum wage rates within 60 days from the anniversary date of the most recent wage order in the concerned region. The President’s directive is an affirmation of the importance, usefulness and effectiveness of the wage boards in addressing the issue of minimum wage adjustments.

12. Following the law and its implementing rules and regulations, the DOLE will implement the President’s directive. On 06 May 2024, the DOLE through the NWPC issued a resolution directing the RTWPBs to commence the timely review of minimum wages. The RTWPB in the National Capital Region has scheduled public consultations for the next wage round, within the 60-day period prior to the anniversary date of the previous wage order on 16 July 2024. The consultation with the labor sector will be held on 23 May 2024 and with the employer sector on 04 June 2024. The public hearing is targeted to be held on 20 June 2024. Thereafter, the RTWPB will decide on the propriety of adjusting the minimum wage for the region. Other regions have been directed to firm up their schedule of consultations and hearing consistent with the President’s directive and with the implementing rules and regulations issued by the NWPC.

13. Finally, the NWPC and each of the RTWPBs have two representatives each from the labor and employer sectors. Under the administration of President Marcos, the NWPC and RTWPBs have been reconstituted to ensure genuine sectoral representation. All the sitting members of the NWPC and the RTWPBs appointed by President Marcos are nominees of their respective sectors. The DOLE – and indeed the Government – will be counting on them to ensure that adjustments in minimum wages will always adhere to the criteria and standards set by law, and will always take into consideration the needs and concerns of workers and employers, the socio-economic conditions prevailing in each region, and overall development goals for the best interest of the country.

ANNEX 1

TABLE 1. Amount of Wage Increases in Non-Agriculture based on the Last Two Wage Order by Region: May 2024

Source: National Wages and Productivity Commission/RTWPBs

ANNEX 2

Table 2. Amount of Monthly Minimum Wage Increases for Domestic Workers May 2024

Source: National Wages and Productivity Commission/RTWPB

ANNEX 3

Table 3.1 Summary of Wage Increase in Collective Bargaining Agreements (CBAs) Voluntarily Agreed Upon by the Parties by Enterprise Category

 Source of Data: Records transmitted by the DOLE Regional Offices to the Bureau of Labor Relations

Table 3.2. Summary of Wage Increase in Large Enterprises in Collective Bargaining Agreements (CBAs) Settled Through the National Conciliation and Mediation Board: Top 5 Industries

Source of Data: Records transmitted by the DOLE Regional Offices to the Bureau of Labor Relations

Table 3.3 Summary of Wage Increase in Medium Enterprises in Collective Bargaining Agreements (CBAs) Settled Through the National Conciliation and Mediation Board: Top 5 Industries

Source of Data: Records transmitted by the DOLE Regional Offices to the Bureau of Labor Relations