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 ensure a decent standard of living for workers and their families, and contribute to the competitiveness of enterprises through improved productivity of workers.

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 industry levels.
• 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 and technical assistance to enable workers and employers to conclude productivity agreements.

The NWPC is tasked to develop general policies and guidelines on wages, incomes, and productivity and exercise technical and administrative supervision over the RTWPBs.

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

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

• 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.

Information and Publication

• 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 ang gainsharing.
• Conduct wage clinics or one-on-one consultation with clients on wage related concerns.

A. Policy/guidelines/standards formulation on wages and productivity

1. Continue the current system of regional minimum wage fixing through the Regional Tripartite Wages and Productivity Boards, along the “safety-net“ or floor wage approach

2. Formulate wage guidelines/wage advisories as reference for wage negotiations in selected industries or sectors and BMBEs

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

4. Strengthen advocacy on legislative bills on wages and productivity

5. Action planning/monitoring of implementation of National Human Resource Agenda for Improving Productivity and Global Competitiveness

6. Continuous improvement of wages and productivity databases including the implementation of Wage Determination Process Information System (WageIS)

B. Technical assistance and advocacy services on wages and productivity

1. Expand implementation of the ISTIV Productivity Awareness Program (ISTIV-PAP) among SMEs thru an accreditation program

2. Promote ISTIV-Bayanihan PAP for micro enterprises and BMBEs

3. Promote productivity improvement and gain sharing schemes at the firm level

4. Intensify networking and strategic alliances on productivity through various programs such as HLP (Labor Education Program), Unlad Kabuhayan (informal sector), and Productivity and Efficiency Outcome Portfolio under the SMED Plan, among others.

C. Management Services

1. Continuously improve internal processes to provide quality services to clients through implementation of: Continuous Process Improvement, ISO 9000:2001 accreditation, Human Resource Development Program, Client Satisfaction Measurement Plan and Information Systems Strategic Plan

2. Promote employees welfare through implementation of Collective Negotiation Agreement (CNA), health maintenance program and sports/cultural activities.

3. Operationalize Administrative Management Information System (AMIS) and Electronic National Government Accounting System (e-NGAS)

NWPC Policy Guidelines No. 01
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.

The Commission      

The NWPC is composed of the following:

The Boards

     Each RTWPB is composed of the following: