DOLE urges employers to correct wage distortions

MANILA, Philippines — The Department of Labor and Employment yesterday urged employers to correct wage distortions among their workers.

DOLE’s National Wages and Productivity Commission (NWPC) issued Advisory No. 1-2023 that would “guide enterprises in correcting wage distortion stemming from the implementation of minimum wage orders.”
The newly released advisory “reiterates relevant provisions of the Labor Code and jurisprudence on the matter.”

It also “outlines how instances of wage distortion may be recognized, and provides suggested formulas with sample computations for addressing and correcting these distortions.”

Wage distortion occurs when the variations in wage structures or rates among employee groups within an enterprise are significantly eliminated or substantially diminished due to mandated wage increases.
Restoring the substantial distinction or gap is permissible under Article 124 of the Labor Code.

“Addressing wage distortion is crucial for maintaining equity, boosting employee morale and fostering a productive and harmonious workplace,” the DOLE stressed.

The labor agency added, “By rectifying such, enterprises demonstrate their commitment to fair compensation and employee well-being.”

In a statement, the NWPC said that when facing wage distortion concerns, enterprises should seek guidance and technical assistance from the Regional Tripartite Wages and Productivity Boards.

Employers and employees may also look into the examples provided by the NWPC on how to adequately address wage distortion.

This, it said, include the formulas known as Pineda; Pineda-Cruz-So; Phil Construction Supply; Wirerope; Percentile Approach; Bagtas and Joda.

“The attached formulas and examples may serve as guide in adjusting wage structures to rectify any wage distortions. But the employers and workers may develop and agree on a formula based on their specific needs and circumstances,” said NWPC.

To date, the minimum wage rates in Metro Manila have been adjusted by P40 effective July 16, 2023.

Earlier, the Federation of Free Workers (FFW) warned private establishments that the issue of wage distortion may result to unrest in workplaces if left unresolved.

“The P40 wage hike in the National Capital Region will surely bring wage distortion. This situation can lead to unfairness and potential unrest among the workforce as it disrupts the established hierarchy of wage scales,” said FFW president Sonny Matula.

Wage increase

Some large conglomerates which registered huge incomes in the first half of 2023 can afford an acceptable wage increase and can afford the wage increase for workers, said Senate President Juan Miguel Zubiri, as he made another push for his call for a P150 minimum wage increase to attract skilled workers to stay in the country.

Zubiri urged the economic managers of President Marcos to find “an acceptable number” for wage increase of workers during the Development Budget Coordination Committee (DBCC) briefing on the proposed P5.767-trillion budget for 2024 at the Senate on Wednesday.

The Senate President said some large conglomerates that have registered huge net incomes – such as JG Summit with P9.5 billion in the first half of 2023; Ayala Corp. up by 55 percent; Philippine Airlines, P13.6 billion record net income and Megaworld, surging by 71 percent in the first half of 2023 – can all afford to pay an increase in minimum wage.

“I hope that you can agree that maybe we can find a number that is acceptable because I’ve spoken to Frederick Go, I’ve spoken to Megaworld’s Kevin Tan, I’ve spoken to a lot of the taipans and they’ve said they can. It’s possible,” Zubiri said in Filipino.

The Senate President also said that in his discussions with American companies that wanted to invest in the Philippines, they were appalled to learn about the wage rates in the country. They want to come here and pay Filipinos decent wages.

With the present minimum wage rates, he told Diokno that they will really find it difficult to find skilled workers for infrastructure projects of the government because “they’re comfortably located abroad.”

“Our workers, Mr. Secretary, are in the rut. Can we give them a bit of a fighting chance? I truly believe if you put in the effort to help our workers, we will have more productivity and maybe we can entice more of them (skilled workers abroad) to come home,” Zubiri said.

“We have no more workers. Most of our skilled workers (went) abroad. Most of our best welders and electricians are all in Saudi Arabia, the Middle East,” he told economic managers

Zubiri was responding to a statement made by Finance Secretary Benjamin Diokno, indicating that a shortage of skilled workers in the country compels the government to hire Chinese workers.

“And why, Your Honors, (is there a shortage)? Because to be honest, they don’t feel that they can survive with the salaries that we have here in the Philippines,” the Senate President said.

Zubiri still pushed for the increase even after the wage board recently approved an increase of P40 in the minimum wage of workers in Metro Manila, bringing the total to P610 a day. For the rest of the country, the minimum wage rates stayed the same.

“What’s worse, the P40 wage hike is only in Metro Manila. To us in Mindanao, it has not moved. Do you know what the daily wage earner in her (Budget Secretary Amenah Pangandaman) province earns? P340. What can you buy with P340 for a family of five?” asked Zubiri.

“The cost of rice is the same. The cost of energy is even more expensive in Lanao del Sur. Jollibee, McDonald’s (products) are priced the same as here in Manila. My point is, I think we also need to look into the possibility that we increase the wages of our people a bit,” he continued.

While Zubiri acknowledged Diokno’s concern that raising minimum wages will have an adverse effect on inflation, this can be addressed by focusing efforts on reducing energy and food costs.

“What we need to focus on is our energy sector, which is the most expensive. We are one of the most expensive. So, all investors, their first question is, why is your electricity so expensive? That’s what we need to reduce, the food cost and electricity cost,” he said.

“The lack of quality jobs is also because of the lack of quality skilled workers that we have. They are all leaving. The diaspora that we’re seeing now is because of the low wages, and I’m not just talking about minimum wage. Even middle income earners should have an increase,” he continued.