WITH the first two-tiered wage order issued for Southern Luzon, the Philippines is now on its way to joining its “progressive” colleagues in the Association of Southeast Asian Nations, the Department of Labor and Employment said.

DOLE Secretary Rosalinda Baldoz said the Wage Order No. 15 covered workers in the Cavite, Laguna, Batangas, Rizal, and Quezon (CALABARZON) region.

“The Philippines is definitely in transition to a two-tiered wage system, which offers better protection to minimum wage earners, ensures better viability of enterprises, recognizes and rewards productivity and performance, and strengthens collective bargaining,” she said.

With such a wage order, she said even barangay micro business enterprises will benefit from the wage system because a productivity-based wage “does not exempt any industry.”

Under the two-tiered wage system, all workers get a floor or basic wage, while a second tier – a flexible rate above the floor wage – will be based on worker productivity and industry or enterprise performance, which may be negotiated between the employer and the workers.

The DOLE said this wage reform seeks to modernize the minimum wage setting in the country.

“It aims to minimize the unintended outcomes of mandated minimum wages, improve the coverage of the vulnerable sectors, and promote productivity improvement and gain sharing," it said.

"Its implementation has been endorsed and is supported by the National Tripartite Industrial Peace Council,” it added.

Wage Order No. 15 sets the regional floor wage at P255.00, with a conditional temporary productivity allowance (CTPA) of P12.50 for workers already receiving more than P255.00.

The floor wage of P255 under the first tier requires an additional amount of P2 to P90 per day over the minimum wage levels that are currently below P255.

It takes into account the current poverty threshold, average wage, and the regional socioeconomic condition.

Under the new wage order, the adjustments in the current minimum wage level shall be: in the non-agriculture sector, the lowest minimum wage level of P253 in 2011 will increase to P255 in 2012; in the agriculture sector, it will increase from P213–P250 to P231–P255; and in retail and service establishments with ten workers or less, it will increase from P165–P232 to P183–P208.

“The adjustments will be done in tranches from 2012 to 2016 so as not to burden enterprises with the abrupt and huge wage increases, such as those requiring a P90 per day adjustment. Within a five-year period, the lowest minimum wage in each sector will be adjusted to the floor wage of P255,” Baldoz said.

She added the P12.50 CTPA, under the second tier, represents contributions of the workforce to the growth of regional economy from 2010 to 2011.

But Baldoz said the CPTA will only be paid to private sector workers that are already receiving higher than the floor wage of P255 and to those employed in enterprises that have not yet established productivity improvement and incentives committees (PIICs).

“The second tier in the wage order is temporary in nature, but it calls for the creation of PIICs in every workplace. The PIICs will determine performance parameters, coverage, and the productivity-based pay to be given to the workers,” she said.

She added that through the PIICs, “labor and management will be able to jointly pursue higher and sustainable levels of productivity, output, and competitiveness, which will all significantly contribute to the creation of a business environment conducive to investments, employment, and growth.”

Expected to primarily benefit from the establishments of PIICs are the 34 export processing zones (EPZs) currently operating in the region, including Cavite with 9 EPZs, Laguna with 17 EPZs,  Batangas with 7 EPZs and  Rizal with 1 EPZ.

The CALABARZON Region is the first region in the country to pilot run the two-tiered wage system. (GMA News)