CAGAYAN DE ORO, Philippines – The Northern Mindanao regional wage board primarily considered the well-being of workers and their families when deciding the minimum wage, taking into account poverty threshold estimates provided by the Philippine Statistics Authority (PSA) every three years.

This week, more than 140,000 daily minimum wage earners in the region are expected to receive a raise.

With a poverty threshold of P12,015 in 2021 that the PSA released a year later, it took seven months for the seven-member Regional Tripartite Wages and Productivity Board (RTWPB) in Northern Mindanao to conduct the wage-setting process.

The process began on May 24, 2023, when they agreed to review the prevailing minimum wages, even in the absence of a filed petition for wage adjustment. 

Section 3(A) of Republic Act No. 6727 or the Wage Rationalization Act, provides that the regional wage boards may motu proprio initiate wage review. A series of provincial wage consultations, a public hearing, and board deliberations were then held. 

Last December 21, the RTWPB-Northern Mindanao issued Wage Order No. RX-22, providing an increase of P33 per day on existing daily minimum wages to be given in two tranches: P23 this Thursday, January 11, and P10 by July 1.

By then, the new minimum wage rates in the region would be from P423 to P438 for the non-agriculture category, and from P411 to P426 for the agriculture category. 

The new rates are expected to directly benefit over 144,000 daily minimum wage earners and about 267,000 workers may also get salary increases, on top of existing above minimum rates, through wage distortion corrections.

During a January 4 public forum, Arsenio Sebastian III, the management sector representative in the regional wage board, said the review of rates under Wage Order No. RX-21 was necessary due to the poverty level in Northern Mindanao, even without a formal petition for it.

Wage-setting criteria

Sebastian said it was already over a year since Wage Order No. RX-21 took effect and they were mandated by law to conduct periodic reviews of socio-economic conditions of the region based on a set of criteria for minimum wage fixing.

The criteria are intended to maintain the minimum standards of living necessary for the health, efficiency, and general well-being of employees. Article 124 of RA No. 6727 provides that the regional wage boards should consider the following:

• Demand for living wages
• Consumer price index
• Cost of living
• Needs of workers and their families
• Need to induce industries to invest in the countryside
• Improvements in standards of living
• Prevailing wage levels
• Fair return on the capital invested
• The capacity of employers to pay
• Effects of employment generation
• Prevailing family income
• Equitable distribution of income and wealth  

Poverty threshold

Bernie Salinas, a supervising labor employment officer at RTWPB-Northern Mindanao secretariat, said three out of the four wage rates, effective since June 18, 2022, under Wage Order No. RX-21, were found to be below the 2021 poverty threshold. The PSA released the nationwide and regional poverty threshold estimates for the full year of 2021 on August 15, 2022.

The poverty threshold is the minimum income required for a family or individual to meet the basic food and non-food requirements.

Northern Mindanao’s poverty threshold in 2021 was P12,015 for a family of five, based on the PSA Poverty Survey Result. And since the region has an average family size of 4.2, which was also determined by the PSA, the poverty threshold should be P10,092, they said.

The wage rates, as set by Wage Order No. RX-21, were P390 to P405 for non-agricultural workers and P378 to P393 for agricultural workers, who are expected to work 26 days a month. Officials said their monthly earnings would range from P10,140 to P10,530, and P9,828 to P10,218, respectively.

Salinas said that, once mandatory deductions like withholding tax and social security were applied, three of the wage categories would fall below the poverty threshold, a point which supported Sebastian’s statement that they ensured the adjustments would be above the region’s poverty line.

The next PSA full-year Poverty Survey Results for 2024 are expected to be available in mid-2025.

With the poverty line drawn, the number of residents below it is estimated by PSA at 1.72 million in 2021.

Compliance

Meanwhile, Engineer Milbert Macarambon, a labor representative in the RTWPB-X, said they did a balancing act when they decided the amount of wage adjustment and the schedule of wage order. A P50-wage adjustment was initially proposed this May 1, 2024 (Labor Day) for the full implementation of two-tranche salary increases.     

Macarambon, however, said they could not insist on a P50 increase as an abrupt one-time wage adjustment may lead to the closure of establishments and many would be jobless. He said other firms that cannot pay, may not be able to comply with the new wage order.

Lawyer Erwin Aquino, DOLE regional director and chairperson of RTWPB-X, said there was a 90% compliance with Wage Order No. RX-21 on the 1,068 establishments they inspected last year.

The previous wage order, which granted an adjustment from P40 to P47, was implemented in two tranches – P25 plus P15, and another P25 plus P22 – that took effect on June 18, 2022, and December 16, 2022, respectively.

Wage Order No. RX-22 applies to all minimum daily wage earners, regardless of the size in terms of workforce and capitalization of the business establishment, Aquino said. – Rappler.com