Assessment of the Initial Implementation of the Two-Tiered Wage System

In 2012, RTWPBs adopted the Two-Tiered Wage System (TTWS) as an approach to the setting of minimum wages.   It defined the policy space for minimum wages as that which is slightly higher than the poverty threshold to ensure basic needs of workers but not to exceed average to allow bipartite approaches in the setting of better terms and conditions of work.  It consists of a mandatory minimum wage to protect poor and vulnerable workers from undue low wages and a voluntary productivity incentive scheme to encourage workers and enterprises adopt productivity improvement and gainsharing programs.

As of yearend, 19 rates out of a total of 110 minimum wage rates were found to be below the regional poverty threshold.  The minimum wage-poverty threshold gaps were mostly in the sectors of agriculture and retail/service establishments regularly employing not more than ten (10) workers.

Meanwhile, the ratio of the regional minimum wages to average wages averaged 78% in 2013.

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