DOLE eyes 2-tiered wage system

The Department of Labor and Employment (DOLE) is considering a new two-tiered wage system as it hopes to improve the labor situation in the country. National Wages and Productivity Commission (NWPC) executive director Ciriaco Lagunzad III said this after consulting with representatives of the concerned sectors. Lagunzad said this will replace the current system of minimum wage setting and eliminate "negative unintended outcomes" of the present system. He said the negative outcomes include risks to inflation and unemployment; increasing informality; distortion of pay structures; weakening of the incentive for collective bargaining; and discouraging pay-for-performance schemes. The proposed system will have two tiers or levels, the first of which is a mandatory national wage or floor wage. The floor wage will protect the incomes of the most vulnerable sectors from undue low wages, Lagunzad said. A second tier is a "productivity-based" approach to determining wages above the floor wage, to encourage improvement in performance. "This should remove the disincentive for collective bargaining and promote bipartite modes in determining wages and other terms and conditions of work," the DOLE said. Under the current minimum wage setting system, the Regional Tripartite Wages and Productivity Boards (RTWPBs) adjust minimum wages based either on a wage petition filed or on its own (Motu Propio). Before decisions are made, the RTWPBs conduct a series of multi-sectoral consultations and public hearings to determine the effect of a wage adjustment on all sectors. The trends or patterns in key socio-economic indicators, needs of workers, and capacity of employers to grant wage increases are likewise among the factors being considered by the RTWPBs in deciding on wage increases. Lagunzad said RTWPBs are tripartite, with majority of the employers’ and workers’ representatives coming from the Employers’ Confederation of the Philippines (ECOP) and the Trade Union Congress of the Philippines, respectively, the two being the largest and most dominant sectoral organizations. He said the seven wage orders issued so far by the RTWPBs this year were based on the petitions filed with concerned Regional Boards. The amounts of wage increase across regions vary: P22 in NCR; P15 in Region 6; P13 in Region 10; P21 in Region 11; P10 in Caraga; and P12 in ARMM. The new minimum wage of P404 in NCR took effect on July 1, 2010. –VVP/KBK, GMANews.TV