Legislated wage increase: A quantum leap backward

In 1989, both houses of Congress unanimously passed Republic Act 6727 known as the Wage Rationalization Act which aims to STREAMLINE and DEPOLITICIZE the wage-setting process nationwide that was previously governed by RA 602 or the Minimum Wage Act of 1951.

RA 6727 created the Regional Tripartite Wages and Productivity Boards (RTWPB) composed of representatives of government, labor, and employers.

It was granted exclusive authority to set wages throughout the country as it constantly monitored various economic factors affecting salaries and wages by region.

The law aimed to replace the old system of legislated wage fixing which disregarded regional, provincial, and industrial differences in living costs and standards.

But on 19 February 2024, Senate Bill 2534 was unanimously approved marking the senators’ second attempt to reclaim the wage-fixing authority from the RTWPB. The first attempt that proposed a P100-a-day increase was vetoed during the term of President Gloria Macapagal-Arroyo (PGMA). The senators then and now seem to be excessively obsessed with reassuming the authority to fix wages in order to gift the workers on Labor Day and presumably in aid of reelection.

The foregoing narrative tries to put in perspective the reported remarks of Labor Secretary Bienvenido Laguesma at the Kapihan sa Manila Bay cautioning against the adverse effects, especially on MSMEs, of reverting to the previous process of LEGISLATED wage increases.

The Secretary left unsaid the views of employers, economists and many others that legislating wage increases is a discarded, discredited and wrong policy. However, at the forum, Secretary Laguesma advised employers nationwide to be prepared for another round of mandated salary increases as determined by the RTWPB.

He issued the statement in compliance with the directive of PBBM.

Employers who complied — with great difficulty — with the recent wage orders of nine of 17 regions may again feel a disturbing discomfort in Secretary Laguesma’s instruction to the RTWPB, earlier described as a trilateral body, which UNANIMOUSLY approved the last wage order.

But being a tripartite partner with government and labor, the employers respect the above instructions of Secretary Laguesma to the RTWPB as part of his job as Department of Labor and Employment (DoLE) chief.

Despite concerns about the potential financial harm to MSMEs, employers view Secretary Laguesma’s directive as a constructive step towards dialogue among the tripartite partners.

While employers are anxiously alarmed by the pronouncement of Secretary Laguesma, we believe that cerebral and dispassionate debate and dialogue, sans name-calling and threats, is the essence of the true spirit of tripartism in reaching an acceptable compromise, based on our mutual objective to promote the welfare of workers and maintain the financial viability of enterprises.

We urge labor leaders and Senator Zubiri to lower their overheated rhetoric in their call for the removal of Secretary Laguesma from DoLE and instead allow and support a reasoned discussion of the merits of any wage adjustments by the tripartite members of the RTWPB, as originally envisioned.

And to start a productive conversation, they have to modulate their hysterical rage and tone down their jingle that is designed to incite the mob.

The challenges surrounding wage regulations are multifaceted and need careful study, deliberation, and collaboration among all stakeholders. While the pursuit of fair wages for workers is a noble cause, it must be balanced with the need for economic stability and sustainability, especially in an environment marked by diverse regional realities and economic constraints.

We should not allow short-term gains and political expediency to override constructive dialogue that seeks equitable and pragmatic solutions for both workers and employers.

The spirit of tripartism needs to be upheld and nurtured, rather than set aside, in order to balance the interests of all the parties involved. As we continue to navigate the complexities of this issue, let us heed the wisdom in the Book of Proverbs (18:2) that recognizes the value of seeking understanding and engaging in meaningful discourse over merely voicing one’s own opinions.