STAKES are high in the ongoing review being conducted by the regional wage boards for the possible next round of minimum wages adjustments.
On one hand are the petitions from labor groups demanding a considerable increase in pay hike after three years of stagnant minimum wage rates amid rising prices of basic goods and commodities.
On the other hand is the warning by economic managers that a pay increase at this time could derail the country’s still fragile pandemic recovery.
“Wage fixing is always a messy issue, especially during crisis periods. Given the rapid inflationary situation and the fact that the last round of minimum wage orders was 2018, if I am not mistaken, one is not surprised at the agitated stand of unions for minimum wage adjustments,” the former dean of University of the Philippines-School of Labor and Industrial Relations (UP-SOLAIR) Rene E. Ofreneo told BusinessMirror in an email.
It is a painful balancing act, one which the Regional Tripartite Wages and Productivity Boards (RTWPB) was specifically created to handle and, ironically, now threatens its existence.
Some lawmakers and labor groups are now calling for the abolition of the RTWPBs and reverting to a national wage, supposedly for failing to come out with a substantial pay hike.
Such measures will require new legislation, however. Something which is now unlikely as the 18th Congress is now almost nearing its end.
Wage petitions
With the possibility of a national wage hike deferred to the next Congress, some labor groups like the Trade Union Congress of the Philippines (TUCP) have resorted to filing wage petitions.
Earlier this month, it filed a P470 wage petition in the National Capital Region (NCR) and P430 in Central Luzon. It is expected to file similar petitions in Region 11 on Thursday and in Regions 3, 4-A, 9, and 10 in the coming weeks.
The National Wages and Productivity Commission (NWPC) reported there are 10 pending wage petitions before the six RTWPBs, seeking amounts ranging from over P400 to P750 as of March 21.
NWPC Executive Director Ma. Criselda R. Sy said the outcome is expected to be out by next month.
No one is holding their breath, though, since in the last round of wage orders issued by the RTWPBs, the increase in daily minimum wage rates from 2018 to 2019 only ranged from P8 to P56.
Ofreneo explained that such a trend is unsurprising, considering the composition of the regional wage boards.
The 7-man RTWPB is chaired by the regional director of the Department of Labor and Employment (DOLE), with two vice chairmen: the regional director of the Department of Trade and Industry (DTI) and National Economic and Development Authority (Neda).
The remaining four members include two representatives from employers and two representatives from the labor sector.
“It’s hard for workers to win the wage boards where government and employers usually coalesce when it comes to voting,” Ofreneo said.
Collective bargaining
There is, Ofreneo said, a “less messy” way of doing it. Instead of going big, the former labor official proposed to go small and back to plant-level negotiations.
The localized negotiation is less likely to cause region wide to nationatiwide inflation, but will be much more demanding for both employers and workers.
“The government should ask all companies to undertake employer-employee wage dialogues and, for those capable, bargain for reasonable wage adjustments. Even those companies without unions,” Ofreneo said.
“That’s the enlightened approach, consistent with the Constitution’s mandate: industrial relations is a shared responsibility,” he added.
The proposal is easier said than done due to the low unionization rate in the country.
Data from the Bureau of Labor Relations (BLR) showed that of the country’s around 45.94 million workforce, only around 4.6 percent or around 2.12 million workers as of 2021 are members of 20,047 registered unions.
Of the unionized workers, only189,980 are covered by collective bargaining agreements (CBA), which includes provisions for benefits over what is provided by the law including wage hikes, which are higher than prevailing minimum wage rates.
Incentive schemes
In some cases, companies voluntarily provide such benefits through incentive schemes, but these are exceptions rather than rule.
Based on the 2017 Integrated Survey on Labor and Employment (ISLE) of the Philippine Statistics Authority (PSA), Sy said over half or 17,563 of the 32,288 of the surveyed firms have a productivity improvement program (PIP).
Among those establishments with PIP, only 8,313 have cash incentives in the form of gain-sharing schemes, profit-sharing schemes, or employee stock option plans.
There are also over 7,700 PIP-implementing firms with non-cash incentives such as gift certificates, grocery items, subsidized travel or leisure, electronic gadgets and home appliances.
Sy said PSA conducted another ISLE survey in 2020 and its results are expected to come out this year.
Challenging goal
Data for CBA and incentive scheme implementers showed there is still a long way to go before plant-level negotiations become widely adopted by companies and their workers.
“We are really facing a big challenge when it comes to using bipartite mechanisms to provide better terms and conditions of work for our workers…and yet the labor code states the primacy of bipartite mechanism as the main mode of setting better terms and conditions for work,” Sy said in a virtual press conference on Monday.
Still, the benefits of mainstreaming incentive schemes is worth it since it will reduce the risk from the “unintended negative consequence” of minimum wage adjustments, the labor official noted.
Such consequences include higher unemployment rate, slowing down gross domestic product (GDP) growth, and causing higher inflation.
If companies can provide the needs of their workers at the plant level, the pressure for RTWPBs to regularly adjust minimum wage will be reduced.
“This initiative must not only be for the department [of labor] but the entire tripartite sector since it will involve strengthening the tripartite mechanism rather than looking at minimum wage as the main policy to increase the welfare of workers,” Sy said.
Wage-fixing application
The practical application of productivity-based incentive schemes (PBIS) to minimum wage-fixing is encapsulated by NWPC’s Two-Tiered Wages System (TTWS).
Conceptualized way back in 2010, it makes use of the mandatory minimum wage (tier 1), which is augmented by the productivity-based pay (tier 2).
The implementation of the TTWS, particularly tier 2, is voluntary.
Based on a 2019 study of NWPC, both workers and employers will greatly benefit from implementing TTWS.
Workers covered by the scheme became more productive and motivated because of incentives. As for the employers, they enjoyed higher revenues and savings from their workforce as well as reduced customer complaints.
“They likewise reported having more harmonious relationships with their employers because of the incentive schemes introduced,” Sy said.
Selling point
But why do productivity-based incentive schemes (PBIS) such as the tier 2 of TTWS remain unpopular among companies?
Bureau of Labor Relations (BLR) Director Maria Consuelo S. Bacay said the answer lies in the “selling point” and awareness for PBIS among companies.
“Of course the employees would be glad to participate in the negotiation especially if it will kick off incentives…but the question is, what is in it for the employers? What will they get out of it?” Bacay told BusinessMirror in a phone interview.
And then the pandemic also happened, which forced many companies into survival mode instead of considering how to further improve their operations.
In 2019, NWPC said 993 micro, small. and medium enterprises (MSMEs) installed their PBIS, but this shrank to just 28 the following year with the onset of the pandemic before rebounding to 149 in 2021.
Bacay said she has been approached by NWPC on how to “package” the TTWS to make it more appealing for establishments especially as the country is now eyeing to start pandemic economic recovery. .
“I think we have to use more databases in its presentation…We need concrete examples of how the program became successful because we have an evidence-based culture,” Bacay said.
The labor official said they are currently still working out how to effectively market the scheme.
Image credits: Nonie Reyes