DOLE says two-tiered wage setting proposal has broad support;
Will conduct tripartite consultation soon
Department of Labor and Employment Secretary Rosalinda D. Baldoz yesterday said her proposal for a review and consequent reform of the country’s current wage setting system is gathering broad support from the government’s tripartite partners, an indication that the government’s public-private partnership approach in shaping labor policy is on the right track.
“In our recent consultation meetings, our social partners already expressed support for the review and reform of the current minimum wage system towards a two-tiered wage system,” Baldoz, in a press conference yesterday, said.
Baldoz said the DOLE is currently pursuing a two-tiered wage policy reform to replace the current system of minimum wage setting, and she had instructed the National Wages and Productivity Commission (NWPC) to study the proposal.
NWPC Executive Director Ciriaco Lagunzad had said the NWPC’s initial assessment of the current system indicated that it had resulted in negative “unintended outcomes,” among which are risks to inflation and unemployment; increasing informality; distortion of pay structures; weakening of the incentive for collective bargaining; and discoursing pay-for-performance schemes.
Baldoz, who has described these “unintended outcomes” as “structural flaws”, said the remedy is to study—and if readily feasible—implement a two-tiered system of wage determination.
As the DOLE chief described, the first step, or “tier” to this policy proposal is a mandatory floor wage or national minimum wage to protect the incomes of the most vulnerable sectors from undue low wages.
The second step is a productivity-based approach to determining wages above the national floor.
This second step, according to the labor and employment chief, will encourage improvement in performance, remove the disincentive for collective bargaining, and therefore promote bipartite modes in determining wages and other terms and conditions of work.
“The key to this is to forge consensus among our tripartite partners on a set of flexible industry wage guidelines that will link higher wages with increases in productivity and improved enterprise performance,” Baldoz explained, adding:
“We have noticed that our wage boards continue to raise the minimum wages in the regions, revealing unintentionally, the structural flaw of our current wage setting system. Because of this, it is high time for the NWPC to bring to our tripartite partners its study of the two-tier wage setting proposal for consultation.” Baldoz said.