Inflationary pressures are increasing the cost of life by the day. A growing number of employees want to be paid more in exchange for their services in order to lessen the burden of expensive requirements. Commodity prices have also risen since the start of the COVID-19 pandemic and have not returned to their previous levels. The Metro Manila wage board has authorized a P40 minimum wage hike for workers in private companies, according to the Department of Labor and Employment (DOLE). Let’s go through the details of the minimum wage hike in NCR this year.
What is a Minimum Wage?
A minimum wage is the least amount of money you have to provide your employees. A wage agreement or a worker contract, in general, cannot reduce the set minimum salary. Minimum compensation can be determined by current legislation, rulings by authorized government officials, salary councils, municipal governments, or labor courts.
What is the Importance of a Minimum Wage?
By imposing a minimum wage, lawmakers may protect employees’ rights, encourage equal opportunity, and prohibit unethical salary arrangements. This critical criterion promotes an acceptable employee living level, minimizes disparities in income, and adds to a country’s broader financial health.
Status of Minimum Wage in NCR
The pay increase was enshrined in pay Order No. NCR-24 on June 26, 2023, detailing the PhP 40.00 increase, introducing the district’s daily minimum wage from PhP 570.00 to PhP 610.00 for those working in the non-agricultural industry and from PhP 533.00 to PhP 573.00 for the agricultural industry, support, and retail businesses relying on 15 or fewer workers, and manufacturing companies working with less than ten workers. The wage directive went into effect on July 16, 2023.
What is Covered in the Wage Increase?
The increased rates, which represent a 7% rise over the district’s current daily minimum salary rates, continue to exceed the local low-income threshold of PhP 452 a day for a household of five people. These additionally culminated in a 7% rise in wage-related upsides, including 13th-month payment, service incentive leave (SlL), and social security perks like SSS, PhilHealth, and Pag-lBlG.
Who are the Beneficiaries of the Minimum Wage Increase?
The pay increase is estimated to assist over one million NCR workers earning minimum wages. Approximately 1.5 million full-time salaried employees earning more than the minimum wage may also gain inadvertently due to higher modifications at the firm level caused by pay skew rectification.
Who Sets the Minimum Wage?
In the year July 1989, the Philippine Congress passed Republic Act No. 6727, often known as the “Wage Rationalization Act.” The Act created a new method for determining the minimum wage by establishing the National Wages and Productivity Commission (NWPC) and Regional Tripartite Wages and Productivity Boards (RTWPBs) in each area of the Philippines. Some of the organization’s responsibilities include…
- Establish regional, provincial, and/or industry minimum wages
- Encourage productivity enhancement and profit-sharing systems, particularly among micro, small, and medium-sized businesses.
- Develop wage, income, and productivity rules and recommendations and managerial and operational oversight of the RTWPBs.
- Assist the President and Congress on wage, income, and productivity issues.
- Provide excellence and efficiency development training courses for certified micro, small, and medium businesses (MSMEs) owners, executives, and staff members.
Is the PhP 40 Wage Increase Enough?
Renato Reyes, President of Bagong Alyansang Makabayan, stated that the salary increase was still minimal when compared to the typical family living wage. “Ang liit ng dagdag sahod na PhP 40… Ang living wage ay PhP 1,100. Kapag dinagdag ang PhP 40, nasa PhP 610 lang ang NCR wage, o kalahati lang ng nakabubuhay na sahod,” he shared in a post through social media. He additionally noted that the PhP 40 salary rise is quite a distance from the Senate plan to raise the private sector minimum salary to PhP 150. Senate President Juan Miguel Zubiri, who is a major supporter of the Across-the-Board Wage Increase measure in the upper house, likewise judged this progress inadequate.
The Private Sector
What is a Compensation Package?
Compensation for workers is the sum of pay and perks paid to every worker as payment for their hard work. Although a compensation package may include pay, benefits, commissions, and stock options, the best mix of remuneration for each individual will be determined by a number of criteria.
Providing competitive and equitable employee remuneration is critical for recruiting and maintaining top personnel, so you should be familiar with the broad range of packages that are obtainable. There are five basic pay packages that you may provide to employees. You are not required to limit employee remuneration to one of these alternatives; you may select an assortment of options.
Five Types of Salaries
Basic Pay
A basic pay package is a defined amount of money that a worker earns as payment for working a certain number of hours per week (usually forty). The majority of staff members are paid, although their function dictates if they are regular or freelance.
Equity Pay
Companies can design equity incentive packages by providing personnel with a basic wage as well as options to purchase stocks. Workers in positions of power or with difficult-to-recruit characteristics are frequently granted stock options.
Commission Pay
A commission or incentive pay is a salary offered to employees depending on their performance. Many incentive programs feature a modest base payment as well as significant commissions, whereas others solely give royalties. The incentive package encourages workers to do their jobs efficiently since their income is linked to their achievement.
Bonus Pay
Supplements are frequently linked to an employee’s, their team’s, or the company’s overall success. Although incentives can be given to individuals at any level, many firms pay bonuses to people in positions of management.
Benefit Inclusions
A worker’s benefit bundle contains advantages that employees gain alongside their regular pay. You are obligated by law to provide certain employee perks, such as family and medical leave, along with medical coverage.
Importance of Providing a Competitive Pay
Increase Employee Loyalty
Employees are more inclined to stay with a firm if they are properly compensated and pleased. Good compensation is one of the reasons that workers stay with the company they work for.
Loyalty eliminates the need for company owners to keep spending energy, resources, and time on hiring new applicants. Retention of staff and low turnover rates benefit firms that create a well-trained crew.
Boost Productivity and Profitability
Workers who feel appreciated are more motivated and dedicated, which enhances output in connection with salary. Individuals are not just more driven to perform an excellent job, but the more years they stay with the organization, the better they learn and the more effective they become.
Attracting Top Talent
Ensure you give a comparable offer to prospective workers to draw in the top individuals for your organization. Selecting the appropriate applicant first lowers recruitment expenses and allows business owners to focus on other duties.
Achieving the minimum wage standard helps to guarantee that your workforce’s fundamental, day-to-day needs are met. However, shifting rates for minimum wages affect employee wage computations, particularly if done manually. A one-size-fits-all strategy is no longer viable. With the increase of diversity in the labor force, there is a greater need to deploy a variety of worker advantages.
Offering your employees the correct compensation and incentives is critical for recruiting and retaining great talent. It also contributes to your firm becoming more multicultural and accessible.
