Proposed Two-Tiered Wage System Raises More Risks to Workers – Labor NGO

The labor department’s proposal to adopt a two-tiered system of wage determination raises more risks than hopes for Filipino workers seeking more decent wages, labor NGO Ecumenical Institute for Labor Education and Research, Inc. (EILER) warned today.

Under the proposed system, the first tier is a mandatory national wage, or a floor wage, while the second tier above the national floor wage is productivity-based. EILER said this system strips workers of any role in wage-setting, since productivity is primarily based on factors external to workers such as technology, machinery and capital investment, among others.

“DOLE’s idea to shift to a two-tiered wage system essentially makes the goal of achieving decent wages more impossible, as it places premium on productivity over decency of livelihood and workers’ survival under the declining living standards in the country. The proposed system also makes wage-setting solely exclusive to businesses and the government,” said Eiler Inc. Executive Director Anna Leah Escresa-Colina.

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EILER said determining wages based on productivity will also further skew the highly varied wage levels across the nation, since productivity levels vary per region, per industry and even per company.

For instance, an NCR worker in a small enterprise with low productivity will receive a smaller wage hike compared to a fellow NCR worker employed in a big company, if the two-tiered system is approved. Under the current system, they stand to receive the same amount of wage increase as approved by the regional wage board.

“The proposed system will further divide workers further not just at the regional level but also at the company level, pitting worker against worker even as living conditions essentially remain backward anywhere in the country,” said Escresa-Colina.

“In the first place, our country generally has low productivity levels as reflected by poor economic development, ranking third among Asian countries with the lowest productivity levels. Essentially, the productivity-based wage system bodes more depressed wages for Filipino workers,” she added.

The labor NGO added that should the proposed wage-setting system pushes through, collective bargaining agreements of various unions will be undermined.

“The system will erase workers’ gains in collective bargaining agreements especially on wage increases, and discredit workers’ right to collective bargaining, as productivity becomes the sole measure of any wage increase that will be implemented above anything else,” Escresa-Colina ended.#

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