The National Wages and Productivity Commission

7/28/2019 The National Wages and Productivity Commission

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National Wages

andProductivityCommission

Labor standards

9:00 a.m. – 12:00 noon

Saturdays

Creation

In July , 1989, the Philippine Congress enacted into lawRepublic Act No. 6727, also known as the "Wage RationalizationAct."

The Act established a new mechanism for minimum wagedetermination through the creation of the National Wages andProductivty Commission ( NWPC) and the Regional Tripartite Wages and Productivity Boards (RTWPBs) in all regions of the country.

The NWPC is an attached agency of the Department of Laborand Employment (DOLE).

http://www.nwpc.dole.gov.ph/pages/legal_corner/ra_no_6727.html

http://www.nwpc.dole.gov.ph/rtw.html







Mandate

The NWPC and RTWPBs, as key policy making bodies on wages,incomes, and productivity, have the following mandates:

• Fix minimum wages on regional, provincial, and/or industrylevels.

• Promote productivity improvement and gainsharing.

Under Republic Act No. 6971, the "Productivity Incentives Act of 1990," they are also mandated to provide the necessary studies andtechnical assistance to enable workers and employers to concludeproductivity agreements.

The NWPC is tasked to develop general policies and guidelines on

wages, incomes, and productivity and exercise technical andadministrative supervision over the RTWPBs.

The RTWPBs, on the other hand,are tasked to implement thewages,incomes, and productivity policies and programs in thierrespective regions. They are thought to be in the best position todetermine the most appropriate minimum wage levels in theirrespective areas of jurisdiction, taking into account regional/area-specific socio-economic differences and industry peculiarities.

Vision

The NWPC envisions a highly productive and justly

compensated Filipino work force.

Mission

To ensure a decent standard of living for workers and toimprove their productivity.

QualityPolicy

The NWPC is committed to:











• Provide quality service that will contribute to the attainmentof a highly productive, competitive and well compensatedFilipino workforce;

• Comply with all applicable regulatory requirements;• Continuously improve its services for the satisfaction of its

internal and external customers through continual processand systems improvement; and

• Develop its human resources

Services

The NWPC and RTWPBs provide the following services onwages, incomes, and productivity:

Research and Policy

• Advise the President and Congress on matters relating towages, incomes, and productivity

• Determine and fix minimum wage rates at theregional,provincial, and industry levels

• Undertake researches and studies on wages and productivity.• Formulate policies and guidelines on wages, incomes, and

productivity

Training and Consulting

• Provide training courses on quality and productivity (Q&P)improvement for company owners, managers, supervisors,and workers of qualified small and medium enterprises(SMEs).

• Extend firm level consulting and technical assistance on theactual implementation of Q&P improvement projects forbeneficiary-SMEs.

• Promote gainsharing schemes at the firm level.

Information and Publication• Render information services in the areas of wages, incomes,

and productivity to walk-in and phone -in clients, as well asthrough the NWPC website and library.

• Disseminate publication and information materials onminimum wages and Q&P improvement ang gainsharing.

• Conduct wage clinics or one-on-one consultation with clientson wage related concerns.





Major Policy Thrusts: FY 2004-2006

A. Policy/guidelines/standards formulation on wagesand productivity

1. Continue the current system of regional minimumwage fixing through the RTWPBs, along the "safety-net" or floor wage approach

2. Promote flexible methods of wage adjustment at thefirm level for wages above the minimum

3. Strengthen the research program to develop moreeffective wage and productivity policies

4. Implement Wage Determination Process InformationSystem (WDPIS)

B. Technical assistance and awareness-raising/capability building services for

workers and employers on wages and productivity

1. Expand implementation of the ISTIV ProductivityAwareness Program among SMEs

2. Promote productivity improvement and gain sharingschemes at the firm level

3. Develop productivity programs for workers in theinformal sector, barangay and micro businessenterprises, and beneficiaries of the DOLE's Poverty Free ZoneProgram

4. Implement the information and media plans underthe ISTIV and PAWIS programs

C. Technical and administrative support services to thePhilippine Council for Productivity

1. As Secretariat to the Philippine Council forProductivity, intensify networking and strategicalliances on productivity for a more effective implementation of theMedium Term National Action Agenda for Productivity


http://www.nwpc.dole.gov.ph/pages/istiv/istiv.html



http://www.nwpc.dole.gov.ph/pages/pawis.html





http://www.nwpc.dole.gov.ph/pages/pawis.html



D. Management Services

1. Implement continuous process improvement projects

2. Implement Administrative and Financial Management

Information System (AFMIS)

3. Implement the following plans: ManagementDevelopment Plan, Competency-based Training Plan,Client Satisfaction Measurement Plan, and Information Systems

Strategic Plan (2002-2006)

4. Promote employees welfare through implementationof Collective Negotiation Agreement (CNA), healthmaintenance program, provident fund, and sports/cultural

programs

Organization

The Commission

The NWPC is composed of the following:

• Secretary of Labor and Employment-ex-officio Chairman;• Director-General of the National Economic and Development

Authority (NEDA) as ex-officio Vice Chairman;• Two representatives each from the worker and employer

sectors (appointed by the President for a term of five years)as Members; and

• Executive Director of the NWPC Secretariat-ex officiomember.

The Commission is assisted by its secretariat.

The Boards

Each RTWPB is composed of the following:

• DOLE Regional Director as ex-officio Chairman;• Regional Directors of the NEDA and Department of Trade and

Industry as ex-officio Vice Chairmen; and• Two representatives each from the worker and employer

sectors (appointed by the President for a term of five years)as Members.





The boards are assisted by their respective secretariat.

WHAT IS THE PRESENT MINIMUM WAGE FIXING SYSTEM INTHE COUNTRY TODAY?

Since 1989, minimum wage fixing is done on a regional basis.Previously, it was done at the national level through acts of Congress or by presidential decrees or executive orders.

The Regional Boards, located in each of the 16 regions of thecountry, are the wage setting bodies established by virtue of Republic Act RA 6727 , also known as the Wage Rationalization Actissued on 01 July 1989. These Boards set minimum wages forworkers in the private sector.

WHAT ARE THE CRITERIA FOR MINIMUM WAGE FIXINGADOPTED BY THE BOARDS?

There are 10 criteria for minimum wage fixing under RA 6727 and one under the Rules of Procedures for Minimum Wage Fixing,categorized into four major groups, namely:

(1) Needs of workers and their families

o demand for living wage

o wage adjustment vis-à-vis CPIo cost of living and changes thereino needs of workers and their familieso improvements in standards of living

(2) Capacity to pay of employers/industry

o fair return on capital invested and to pay of employerso productivity

(3) Comparable wages

o prevailing wage levels

(4) Requirements for national development

o need to induce industries to invest in the countrysideo effects on employment generation and family incomeo equitable distribution of income and wealth along the

imperatives of economic social development







CAN THE REGIONAL BOARDS ISSUE A WAGE ORDER EVENWITHOUT A PETITION FOR

WAGE INCREASE?

Yes, even in the absence of a filed petition for wage increase,

Regional Boards can, motu proprio, initiate action or inquiry onwhether a wage order should be issued.

A public hearing is required before the Boards can issue a wageorder.

Records show that the Boards issued a total of 133 Wage Orderssince 1990. Of this number, 62% (83) was issued motu proprio,while 38% (50) was issued by virtue of a petition for wage increase.

CAN THE REGIONAL BOARDS GRANT ACROSS-THE-BOARDWAGE INCREASES?

The wage-setting function of the Regional Boards is confined tominimum wages.

While across-the-board (ATB) wage increases have been grantedin the past, current policy discourages the Boards from grantingATB adjustments as they create more distortions in the labormarket which in turn affect adversely the incomes and standard of

living of workers and thier families. Specifically:

o ATB wage increases have greater impact on inflationo ATB wage increases are disincentives to trade unionismo ATB increases are not consistent with minimum wage

fixing mandate of the Boards

HOW IS THE EQUIVALENT MONTHLY RATE (EMR) OFMONTHLY-PAID

AND DAILY-PAID EMPLOYEES COMPUTED?

Under the Labor Code, private sector workers should receive theapplicable minimum wages not lower than those prescribed by theRegional Boards under existing wage orders. At present, theprescribed minimum wages are for normal working hours, whichshall not exceed eight hours per day.

For monthly-paid employees

The factor 365 days in a year is used in determining theequivalent annual salary of monthly-paid employees. To compute

their EMR, the procedure is as follows:



a) For those who do not works but are considered paid onrest days,

special days and regular holidays:

EMR = Applicable Daily Rate x 365 days

12

Where 365days =

300 days-

Ordinary working days

51 days-

Rest days

11

days -Regular holidays

3 days-

Special days

365 days-

Total equivalent number of days

For daily-paid employees

The following formula may be used in computing the EMR of different groups of daily-paid employees for purposes of entitlementto minimum wages and allied benefits under existing laws:

b) For those who are required to works everyday includingSundays or

rest days, special days and regular holidays.

EMR = Applicable Daily Rate x 392.80 days12

Where 314 300 days - Ordinary working days



days =

20 days -

10 regular holidays x 200%

2.6days -

1 regular holidays (falling on

last Sunday of August x200% + (30% of 200%)

66.30days -

51 rest days x 130%

3.90days -

3 special days x 130%

392.80

days


c) For those who do not work and are not considered paid onSundays or

rest days.

EMR = ADR x 314 days12

Where 314days = 300 days -

Ordinary working days

11 days -

Regular holidays

3 days -Special days (If consideredpaid; if actually worked, this isequivalent to 3.9 days)

314 days -




d) For those who do not work and are not considered paid onSaturdays and Sundays or rest days:

EMR = ADR x 262 days12

Where 262days =

248 days -Ordinary working days

11 days -

Regular holidays

3 days -Special days (If consideredpaid; if actually worked, thisis equivalent to 3.9 days)

262 days -

Total equivalent number of

days

HOW LONG DOES IT TAKE THE BOARDS TO ISSUE A WAGEORDER?

In general, the Boards can issue a wage order within 90 days,given the procedural requirements under the Rules of Proceduresfor Minimum Wage Fixing. The Boards are specifically required to

issue a wage order within 30 days from date of the last publichearing. Thereafter, a Wage Order becomes effective 15 days afterit has been published in a newspaper of general circulation in thearea of jurisdiction.

HOW OFTEN CAN THE BOARDS ISSUE A WAGE ORDER?

In general, the Boards can issue a Wage Order only once in agiven year.

Within the 12-month period from effectivity of the wage order,no petition for wage increase may be entertained, except whenthere is a supervening condition, such as an extraordinary increasein prices of petroleum products and basic goods and services.

The existence of supervening condition is to be determined bythe Boards and confirmed by the NWPC.



CAN THE WAGE ORDERS ISSUED BY THE BOARDS BEAPPEALED?

Yes, any aggrieved party may file an appeal with the NWPC through

the Board within 10 days from the date of publication of the WageOrder

The grounds for appeal are:

o non-conformity with prescribed guidelines;o question of law;o grave abuse of discretion.

HOW ARE WAGE DISTORTIONS CORRECTED?

Should disputes arise as a result of wage distortion, RA 6727 provides for correcting the distortions as follows:

• In organized firms, the employer and the union shallnegotiate to correct the distortion using the grievanceprocedures in the CBA or, if the dispute remains

unresolved, through voluntary arbitration.• In unorganized firms, the employers and workers

endeavor to correct the distortion. Any dispute issettled by conciliation through the NationalConciliation and Mediation Board, or if it remainsunresolved, by compulsory arbitration through theNational Labor Relations Commission.

This provision for correcting wage distortions is alsostipulated in all Wage Orders being issued by the Regional

Boards.

WHAT ARE SOME OF THE SUGGESTED FORMULAS





FOR CORRECTING WAGE DISTORTION?

The following are some of the suggested formulas forcorrecting the effects of the implementation of wage orders

in the existing wage structures of firms:

1. PinedaFormula

Wage distortionadjustment =

Existing minimum wage

Wage of Employee

x Mandatedwage Increase

2. Pineda-Cruz-SoFormula


n


Wage of Employee

x Mandated

wage Increase

Where : Exponent is represented by n

3. PercentileApproach

Where distortion adjustment = Percentile weight of pay group xMandated wage Increase

4. Philippine Construction Supply Formula



Formula base range (FBR)x Mandatedwage Increase

Where : FBR = Actual wage rate (AWR) + Agreed amount of

adjustment

5. Jimenez, Ofreneo, Delas Alas Jr. (JODA) Formula

Wb - Wa



Wage distortionadjustment = 2

New Daily wage rate = wage distortion adjustment + Wc

Where: Wa = old daily minimum wageWb = daily wage of employee (where Wb. Wa, or Wb

is above Wa)Wc = new daily minimum wage

= Wa = mandated wage increase

6. Wirerope Formula

Wagedistortion

adjustment =


Present wage of employee

x (Mandatedwage Increase

Creditable

Increase)

7. Bagtas Approach


New minimum wage

Previous minimum wage

x Presentwage of employee

WHO ARE COVERED BY WAGE ORDERS ISSUED BY THEBOARDS?

Wage Orders issued by the Boards cover only private sectorworkers, except for household helpers and persons in the personalemploy of another, including family drivers.

WHO ARE EXEMPTED FROM WAGE ORDERS ISSUED BY THE

BOARDS?

Per the Rules on Exemption, the following categories of establishments may be exempted upon application with and asdetermined by the Board:

o distressed establishmentso new business enterprises

http://www.nwpc.dole.gov.ph/legal.html#anchornwpc




o retail/service establishments employing not more than10 workers

o establishments adversely affected by natural calamities

The Boards may also exempt establishments other than those

enumerated above only if they are in accord with the rationale forexemption stated in the Rules on Exemption and upon strong justifiable reasons.

WHAT ARE THE CRITERIA AND REQUIREMENTS TO QUALIFYFOR EXEMPTION?

Sections 3 and 4 of the Rules on Exemption list down thespecific criteria and requirements to qualify for exemption, namely:

Distressed Establishments

a. For Stock Corporations/Cooperatives

o registers a deficit of 20% or more of the paid upcapital as of last accountingperiod and interim period immediately preceding theeffectivity of the Wage Order.

o registers capital deficiency/negative stockholders'equity as of the last

full accounting period or interim periodimmediately preceding the effectivityof the Wage Order.

b. For Single Proprietorships/Partnerships/Non-stock,Non-profit Organization

o registers a deficit of 20% or more of the totalinvested capital as of the 2accounting periods and interim period immediately

preceding the effectivity of the Wage Order.o registers capital deficiency/negative net worth as of the

last full accounting periodor interim period immediately preceding the effectivityof the Wage Order

c. For Banks and Quasi-banks





o under receivership/liquidation certified by the BangkoSentral ng Pilipinas

o under controllership/conservatorship

New Business Enterprises

o NBEs established outside the NCR and outsideExport Zones within 2 yearsfrom the effectivity of the Wage Order, classified asagricultural establishments orestablishments with total assets of 5M and below.

Retail/Service Establishments Regularly Employing Not MoreThan Ten Years

o engaged in the ratil sale of goods/services to end users,and

o employing not more than ten workers

Establishments Adversely Affected by Natural Calamities

o establishments located in an area under a state of calamity

o occurence of natural calamities in the area within 6months prior to the effectivity

of the Wage Order.o losses or damage to properties as a result of the

calamity amount to 20% ormore of the capital/stockholders' equity

WHAT KIND OF EXEMPTION CAN BE GRANTED TOQUALIFIED ESTABLISHMENTS?

The Board may grant a -

o

Full exemption of one year for all categories of establishmentso Partial exemption equivalent to 50% may be

granted in the case of distressed establishments

Under the present Rules on Exemption, no extension of theexemption period beyond one year is allowed.



WHAT IS THE EFFECT OF A DISAPPROVED APPLICATIONFOR EXEMPTION?

In case an application for exemption is not approved by the

Board, the company shall pay the mandated wageincrease/allowance to all covered workers retroactive to the date of effectivity of the Wage Order plus simple interest of 1% permonth.

Documents

The National Wages and Productivity Commission