In July 1989, the Philippine Congress enacted into law Republic Act No. 6727, also known as the "Wage Rationalization Act."
The Act established a new mechanism for minimum wage determination through the creation of the National Wages and Productivty 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 Labor and Employment (DOLE).
To be the primary policy development and resource center on wages, incomes and productivity.
To ensure a justly compensated workforce, and to contribute to the competitiveness of enterprises through improved productivity of workers.
The NWPC is committed to:
- Provide quality service that will contribute to the attainment of a highly productive, competitive and justly compensated Filipino workforce;
- Continuously improve its services to the satisfaction of its internal and external customers through continual process and systems improvement;
- Comply with all applicable regulatory requirements; and
- Develop its human resource.
- Determine minimum wages at the regional,provincial and/or industry levels; and
- Promote productivity improvement and gainsharing schemes, particularly among micro, small and medium enterprises.
NWPC formulates policies and guidelines on wages, incomes and productivity and exercises technical and administrative supervision over the RTWPBs.
With 17 RTWPBs (including ARMM) responsible for setting minimum wages and promoting productivity improvement programs.
The NWPC and RTWPBs provide the following services on wages, incomes, and productivity:
Research and Policy
- Advise the President and Congress on matters relating to wages, incomes, and productivity
- Determine and fix minimum wage rates at the regional,provincial, and industry levels
- Undertake researches and studies on wages and productivity
- Formulate policies and guidelines on wages, incomes, and productivity
Training and Consulting
Information and Publication
- 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 the actual implementation of Q&P improvement projects for beneficiary-SMEs.
- Promote gainsharing schemes at the firm level.
- Render information services in the areas of wages, incomes, and productivity to walk-in and phone -in clients, as well as through the NWPC website and library.
- Disseminate publication and information materials on minimum wages and Q&P improvement and gainsharing.
- Conduct wage clinics or one-on-one consultation with clients on wage related concerns.
- Policy/guidelines/standards formulation on wages and productivity
- Implement the two-tier wage system (2TWS) along the objectives of adequate protection to income of vulnerable workers and improved productivity and competitiveness within a total incomes policy framework. Floor or minimum wage shall continue to be set by the RTWPBs . Encourage grant of productivity or performance-based pay in accordance with prescribed guidelines;
- Conduct facility evaluation and time-and-motion studies/work improvement in support of wage fixing and productivity improvement mandate;
- Revisit the relevance of wage policy in light of emerging market conditions and occurrence of natural and man-made calamities; and
- Enhance research and data-base development function towards greater focus on the 2nd tier of 2TWS (industry studies, incentives/gain-sharing schemes)
- Technical assistance and advocacy services on wages and productivity
- Intensify capacity building program on productivity by engaging the assistance of a Singapore-based university for the conduct of a campus-training on productivity, innovation and enterprise development;
- Adopt a supply chain approach in the implementation of Service Quality Training Program for the Tourism Industry and Green ME Program;
- Provide training and technical assistance on productivity improvement to DOLE officers and staff relative to:
- New Labor Standards Enforcement Framework (LSEF), towards greater focus on productivity and competitiveness of MSMEs;
- Better implementation of Convergence programs (NCMB, OSHC)
- Sustainability of DOLE’s livelihood programs (DILP) ;
- Initiate the creation of a multi-agency pool of well-trained and competent productivity specialists within DOLE through a sustained capacity building program on productivity relative to the above programs;
- Adopt more effective communication strategies towards boosting public awareness and securing support on NWPC programs, policies and services on wages, incomes and productivity;
- Document/showcase re-entry plans/actions plans relative to Phase 1 (e.g.. Lets Talk Productivity) and popularize/disseminate gain-sharing schemes
- Intensify networking and strategic alliances on wages, incomes and productivity, both local and international levels.
- Management Services
- Strengthen program management for better and more efficient public service through improved planning process and information services;
- Ensure compliance to Transparency Seal and other anti-corruption measures;
- Recognize and reward exemplary performance and bright ideas of officers and staff;
- Promote employees’ safety and welfare by undertaking programs on health maintenance, sports, cultural activities and through the implementation of the CNA.
Republic of the Philippines
Department of Labor and Employment
NATIONAL WAGES AND PRODUCTIVITY COMMISSION
NWPC Policy Guidelines
Series of 2005
POLICY DIRECTIONS AND PROGRAM THRUSTS : 2006-2010
Pursuant to Article 121 b and c of the Labor Code as amended by Section 3 of Republic Act No. 6727, the National Wages and Productivity Commission hereby adopts the following policy directions and program thrusts to govern the proceedings in the Commission and the Regional Tripartite Wages and Productivity Boards in the determination of minimum wages and the promotion of productivity improvement and gain sharing in the regions:
Section 1. The Commission and the Regional Boards shall continue the policy of minimum wage determination pursuant to Republic Act No. 6727 or the Wage Rationalization Act issued in July 1989.
Section 2. In this context, the minimum wage rates to be set by the Regional Boards shall be rooted on the basic concept of providing workers with "safety net" protection against unduly low wages. Said minimum wage rates shall be confined as much as possible to protecting the lowest paid workers from the vagaries of the labor market. Furthermore, the use of the salary ceiling and across-the-board methods in adjusting minimum wages shall be discouraged.
Section 3. The determination of wages above the minimum shall be left to collective bargaining in the organized sector or employer-employee negotiations in the unorganized sector. The minimum wage levels to be set by the Regional Boards may serve the purpose of providing workers and employers with a reference figure as their guide in salary and wage negotiations. Payment of wages above the minimum may be also based on productivity and/or performance of the enterprise.
Section 4. Following the safety net approach, the present minimum wage structures shall be simplified. Existing differentials based on such factors as employment size, level of capitalization, amount of gross sales, hospital bed capacity, hiring date and population size, shall be discouraged. Thus, wage differentiation shall be based on such broad classifications as non-agriculture, agriculture and retail/service establishments employing not more than 10 workers.
Section 5. The Regional Boards shall continue to implement the existing policy on exemption as embodied in NWPC Guidelines No. 1, series of 1996 (Rules of Exemption from Compliance with Mandated Wage/COLA Increases Granted by the Regional Tripartite Wages and Productivity Boards), until such time that the Commission shall have reviewed and revised the Rules on Exemption in order to make the same more relevant to the requirements of the tripartite sectors.
Section 6. In response to the requirements for business flexibility and emerging global trends, the Regional Boards are encouraged to consult with employers and workers groups in selected industries in order to forge tripartite consensus on wages and wage-related benefits, and on improving the productivity and competitiveness of business enterprises. To this end, the Regional Boards may issue wage advisories to serve as a guide to the parties in drawing up their wage proposals, subject to guidelines to be issued by the Commission.
Section 7. In order to boost the adoption of productivity improvement programs and gain sharing schemes at the enterprise level, the Commission and the Regional Boards shall provide the necessary information and extend technical assistance to micro, small and medium enterprises that may want to set up its ISTIV-Productivity Awareness Program (ISTIV-PAP). Business enterprises may share in the cost of training and consultancy services on ISTIV-PAP and other productivity technologies, subject to applicable existing rules and regulations.
Section 8. With the overriding commitment to provide workers and their families the means to improve their standard of living, and recognizing that such cannot be attained by increasing wages alone, the Commission shall adopt a total income approach in wage policy formulation. Thus, it shall advocate for the provision of adequate social services in such areas as education, health care, housing and transportation and the formulation of sound pricing and taxation policies that enhance incomes and standards of living.
Section 9. This Guidelines shall take effect fifteen (15) days after its publication in a newspaper of general circulation.
Manila, Philippines, 07 December 2005.
(Sgd) LUZVIMINDA G. PADILLA
Undersecretary - DOLE
(Sgd) AUGUSTO B. SANTOS
Acting Director General - NEDA
(Sgd) DAVID L. DIWA (Sgd) FRANCISCO F. FLORO
Member, Labor Sector Member, Employer Sector
(Sgd) CEDRIC R. BAGTAS (Sgd) EDUARDO T. RONDAIN
Member, Labor Sector Member, Employer Sector
(Sgd)REBECCA J. CALZADO
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 officio member.
The Commission is assisted by its secretariat.
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.