Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
Second Regular Session

7787

HOUSE BILL NO.

INTRODUCED BY REPRESENTATIVES
ARIEL B. CASILAO
‘CARLOS ISAGANI T. ZARATE, EMMI A. DE JESUS, ANTONIO L. TINIO,
ARLENE D. BROSAS, FRANCE L. CASTRO, AND SARAH JANE I. ELAGO

EXPLANATORY NOTE

When Pres. Cory Aquino signed into law Republic Act 6727 in 1989, the country
abandoned the old practice of legislating national minimum wage and entered into
the regime of so many regional wage boards setting the wage increases for workers
in each region. The Aquino administration justified this set up as ‘wage
rationalization’.

But its results were contrary to its avowed end. It created a wage system that is
irrational in the sense that it is anti-worker, detached from evolving economic
realities, unjust and inequitable operated against the formation of a decent
minimum wage across the country and even in the regions. To start with, the wage
boards were not really intended to rationalize wages. They have been actually
weaponized to keep the wages of workers low as part of the “come on package” of
the Cory Aquino government to attract foreign investors to its foreign investments-
led economic programs that dispersed industries in the regions which were later
expanded into “regional industrial centers”, “agriculture and fisheries development
zones” and “growth areas” by succeeding governments.

This was the real “rationale” that animated the wage boards and it continues to
animate them to this day. They conducted no independent in-depth studies that
would have informed them and the workers of the minimum level of living wage
that should go to the workers in the light of soaring price increases of goods and
services. If they did any study at all, it was only for deciding particular petitions for
wage increases per regions. Even on this, they are passive instruments for deciding
wage increases. They are slow to react to movements in the market and to the
periodic economic crisis that hit the country in 1998 and 2008. They only act when


poked in the ribs through the petition and public clamor of workers. They rather
focused more in promoting productivity and incentivization programs as basis for
urging companies to increase the non-wage benefits of their workers in lieu of
timely wage increases.

Its irrationality became even more evident when the build-up of investment zoning
of the regions for attracting foreign investments had so connected local markets to
capital cities in the regions and the regions to Metro Manila that it dissolved
significant differences in the price formation of goods and services among localities,
among regions and between the regions and Metro Manila. In one important sense,
the investment zoning of regions became the vehicle for monopolies and cartel-type
commercial operations to penetrate the regions which enabled them to fix prices
that affect not just a locality but all corners of the country. Consequently, workers
across the country now buy from one big monopoly-dominated market where price
differences across regions are minimal if not non-existent. One example is the price
of rice which is an everyday staple of the Filipino people, including ordinary wage-
earners. As we now speak, there is no longer any significant variation of rice prices
between the regions and Metro Manila. Since their creation, the 17 RTWPBs had
issued a total of 367 wage orders in 28 years. These total issuances had increased
the wages of Filipino workers from the 1989 national minimum wage of P
89.00/day to today’s 17 different regional minimum wage scales, ranging from as
high as P512/day in NCR to as low as P265/day in Region V and ARMM. If these
17 regional minimum wage scales are totaled and translated into a median, the
increases accruing in those twenty-eight years amounted only to an average of
316.43. That means that the Filipino workers as a class received only an average
real increase of P227.43 (P316.43 — P89) since 1989 or during the entire twenty-
eight-year regime of regionalized minimum wage. That's an increase of 155 per cent
which is not something to crow about considering its twenty-eight-year journey. In
contrast, the prices of basic necessities increased since 1989 as follows:

Basic needs | 1989 2018 %

item price/kilo | price/kilo | increase

Rice P P 46.00 357 %
7.00/kilo

Meat P P 210.00 250 %
60.00/kilo

Fish (galunggong) | P P 120.00 500 %
20.00/kilo

Egg P 6.00 300 %
1.50/kilo

Cooking P P 22.00 633 %

Oil/bottle 3.00/bottle



To point out the obvious, while the minimum wages in the 17 regions increased by
hesitant small steps as its formation has been occluded by regional wage boards,
the prices of basic goods and services increased by wild leaps and bounds across
the country, unobstructed by any government intervention. This resulted in a
widening gap between minimum wage and cost of living. According to Ibon, it now
requires a daily income of P1,168/day to sustain a Filipino family of six. Given the
pace of wage increases through the twenty-eight-year period of regionalized wage
regime, this is a gap that no worker in the country can ever hope to close even if
the reference is the highest regional minimum wage of P512/day in the National
Capital Region.

It is not only that the current level of wages per region no longer answers to the
basic daily needs of workers’ families. It is also no longer commensurate to the
contribution of labor to the economy. Since 1991, labor productivity across all
sectors has increased from P60,342 in 1991 to P353,206 in 2016, a whooping
353% increase of labor productivity.

RA 6727 laid down ten factors for RTWPBs to consider in setting the wage
increases in their respective regions. But their wage orders lack the transparency
as to how the boards balanced or interplayed the factors in setting their wage
increases. It is hard to appreciate the rationality of their wage orders in the light of
those ten factors.

Under RA 6727, the RTWPBs are allowed to issue wage increase orders once a year.
But there were instances of two-year intervals that, without giving any reason, the
RTWPBs across all regions did not issue any wage orders so that workers did not
receive any wage increase during those intervals. In many instances on specific
years, some RTWPBs issued wage orders while other RTWPBs did not. This must be
because RTWPBs are generally petition-driven although they have the power to
initiate motu propio the process of deciding wage increases. So that where there
were no petitions, there were no wage increases. In a case of extreme particularism,
RTWPBs set differentiated wage increases for the provinces, cities and major towns
covered by its jurisdiction ostensibly to avert wage distortion. In other instances,
some RTWPBs issued wage orders that granted only cost-of-living allowances while
others ordered wage increases. Some RTWPBs separated the COLAs, others ordered
their integration to the daily wage and then suddenly removed the COLAs on their
next wage order. Given these variances, it appears that RTWPBs do not have a
unified understanding of the criteria the law had set for determining wage
increases.

‘Their wage orders resulted in situations in which regions with more or less the
same level of economic development and standard of living have highly contrasting
and if not highly disparate minimum wage scales. Examples of this are Region VI
and Region VII. While concededly Region VII is more developed than Region VI in
terms of infrastructure, industrial and commercial build up, the latter is fast
catching up so that its inflation rate is on the level with the former. But their
minimum wage scales are so disparate as to be whimsical, P298/day in Region VI
as against P353/day in Region VII. Ditto with Region I and Region II. These regions


are both predominantly agricultural and almost the same level of commercial
development and inflation rate. But Region I has a minimum wage of P280/day as
against P300/day in Region Il.

When Region IV-B was still part of Region IV, it used to enjoy the same minimum
wage scale with Region IV-A. When it became a separate region, a succession of
wage orders lowered its minimum wage scale through pittance increases until it
finally lagged so far behind from Region IV-A by almost a hundred pesos, P285/day
in Region IV-B as against P378/day in Region IV-A.

‘The irrationality of the regionalized minimum wage scheme is brought to focus if we
note that the poorest regions in the country have the lowest levels of minimum
wage. This is telling of the unjust theory behind the scheme: a worker living in dirt-
poor ARMM is not entitled to the wages that workers earn in high-standard and
well-off Metro Manila even though that worker has the same productivity skills as
his counterparts in Metro Manila. This injustice feeds on another injustice: it
preserves the economic inequality among regions and between the poor regions and
Metro Manila and resultantly perpetuates the poverty of those poor regions and
their workers.

Wages are supposed to represent the commodity price of labor power. But it is one
of the injustices of our times that unlike other commodities whose prices
automatically move up and down the base line according to the swings in the
market, workers have to fight for their minimum wage. It is thus the duty of society
and the state to create that level field on which workers can fairly fight for their
minimum wage and through which the real price of labor power can freely assume
form according to the motions of prices. Instead of creating that level playing field,
the wage rationalization scheme as embodied by regional wage boards destroyed it.
It not only weakened the power of workers to fight for their minimum wage as one
whole organized mass but also closed the arena for the workers to take their fight
fairly.

Our workers have weighed the regionalized wage regime through twenty-eight years
and found it a big failing. So they are now demanding that it be scrapped and for
this country to return to the regime of legislated national minimum wage that is
based on family living wage.

‘That demand assumes utmost urgency given the exploding impact of Tax Reform
for Acceleration and Inclusion Law on wages. The surge in the prices of oil,
electricity, rice and other basic goods and services in the last five months brought
about by the new TRAIN taxes have devoured, according to some estimates, the
wages of our workers by 25-30%. They are now groaning under the crushing effect
of TRAIN on their wages and income. The fact that the prices of oil and other
petroleum products generally get higher as the region gets farther from Metro
Manila exposes the unfairness to the non-NCR regions and the iniquity of the
present regionalized wage regime.


Finally, this bill also seeks to impose stiffer penalties for companies that do not
follow the national minimum wage.

. CASILAO
ANAKPAWIS Party-list

TSR EG eae oe Toa oa

BAYAN MUNA Party-list GABRIELA Women’s Party
“A
P<ANTONIO L. TINIO D. BROSAS
‘ACT Teachers Party-list GABRIELA Women’s Party
REP. CE} CASTRO REP. ANE I. ELAGO

ACT/feachffs Party-list Party-list


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
Second Regular Session

7787

HOUSE BILL NO.

INTRODUCED BY REPRESENTATIVES
ARIEL B. CASILAO
CARLOS ISAGANI T. ZARATE, EMMI A. DE JESUS, ANTONIO L. TINIO,
ARLENE D. BROSAS, FRANCE L. CASTRO, AND SARAH JANE I. ELAGO

AN ACT ESTABLISHING A NATIONAL MINIMUM WAGE FOR
PRIVATE SECTOR WORKERS
AND IMPOSING STIFFER PENALTIES FOR VIOLATIONS THEREOF, AMENDING
FOR THIS PURPOSE THE LABOR CODE OF THE PHILIPPINES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Section 1. This Act shall be known as the “National Minimum Wage Law of 2018.”

Section 2. It is hereby declared the policy of the State to ensure workers’ right to a
living wage and to humane conditions of work.

In order to promote a living wage for the workers, the State adopts and hereby
institutionalizes the legislation of a national minimum wage as the primary mode of
setting wages for private sector workers in the country and to address regional
wage disparities and to harmonize wage levels across regions with the national
economic and social development plans. Legislated national wage increases should
not be in prejudice of existing terms and conditions on wages as contained in
collective bargaining agreements.

Section 3. In line with this declared policy, Article 99 of the Labor Code is hereby
amended to read as follows:

ART. 99. fRegional] NATIONAL minimum wagefs]. - The NATIONAL
minimum wage {rates} for agricultural and non-agricultural employees and
workers in each and every region of the country shall be [these] THAT


6} THE

prescribed by {the
PRESIDENT BY VIRTUE OF ALAW.

THE NATIONAL MINIMUM WAGE SHALL APPLY TO ALL ENTERPRISES,
REGARDLESS OF LOCATION, SIZE OR INDUSTRY CLASSIFICATION.

Section 4. Abolition of the Commission. Article 121 of the Labor Code IS
HEREBY REPEALED and the National Wages Productivity Commission
ABOLISHED.

Section 5. Abolition of the RTWPB. Articles 122 and 123 of the Labor Code ARE
HEREBY REPEALED. Hence, the Regional Tripartite Wages and Productivity
Boards (RTWPB) created under Republic Act 6727 are HEREBY ABOLISHED.

Section 6. Article 124 of the Labor Code is hereby amended to read as follows:

ART. 124. Standards/Criteria for minimum wage fixing. - The {regional}
NATIONAL minimum waeels to be established fby-the Regional Board} shall

development_program.] THAT WAGE RATE NECESSARY FOR RAISING A
FAMILY AND MAINTAINING ITS DECENT EXISTENCE. IT SHALL BE OF
SUCH AMOUNT WHICH IS SUFFICIENT FOR A WORKER TO PROVIDE
HIS/HER FAMILY THE BASIC AND NECESSARY EXPENDITURES THAT
TAKE INTO CONSIDERATION ALL OF HIS/HER FAMILY’S PHYSIOLOGICAL,
SOCIAL AND OTHER NEEDS, SO AS TO ENABLE THEM TO LIVE AND
MAINTAIN A DECENT STANDARD OF LIVING BEYOND MERE
SUBSISTENCE, WITH ADEQUATE ALLOWANCE FOR SOCIAL SECURITY. In
the determination of such [regional] NATIONAL minimum wage{s], [the
Regional_Beard} CONGRESS shall, among other relevant factors, consider
the following:

(a) The [demand—fortiving—wages] COST FOR PROVIDING THE FOOD,
CLOTHING, SHELTER, EDUCATION, HEALTH MAINTENANCE AND OTHER
NON-FOOD NECESSITIES FOR RAISING THE FAMILY OF A WORKER;

(b) [Weg ae re ice—index] THE
PHYSIOLOGICAL, SOCIAL AND OTHER RELATED NEEDS OF WORKERS
AND THEIR FAMILIES;

(c) [Fhe-eos
VIS-A-VIS THE CONSUMER PRICE INDEX:

(d) The [needs—of—workers—and—their—families] COST OF LIVING AND
CHANGES OR INCREASES IN THEM;

{e} The need to induce industries to invest in the countryside;

] WAGE ADJUSTMENT

{9 (E) Improvements in standards of living;


(i) Effects on employment generation and family income; and

() The equitable distribution of income and wealth along the imperatives of
economic and social development.

Any person, company, corporation, partnership or any other entity engaged
in business shall file and register annually with the appropriate {Regional
Wage-Boards,Cemmissien] REGIONAL OFFICE OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT and the [National-Statisties-Office] PHILIPPINE
STATISTICS AUTHORITY, an itemized listing of their labor component,
specifying the names of their workers and employees below the managerial
level, including learners, apprentices and disabled/handicapped workers
who were hired under the terms prescribed in the employment contracts,
and their corresponding salaries and wages

Where the application of any prescribed wage increase by virtue of a law fer
wage-order_issued_by-any-Regional_ Beard} results in distortions of the wage
structure within an establishment, the employer and the union shall
negotiate to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their
collective bargaining agreement and, if it remains unresolved, through
voluntary arbitration. Unless otherwise agreed by the parties in writing, such
dispute shall be decided by the voluntary arbitrators within ten (10) calendar
days from the time said dispute was referred to voluntary arbitration.

In cases where there are no collective agreements or recognized labor
unions, the employers and workers shall endeavor to correct such
distortions. Any dispute arising therefrom shall be settled through the
National Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred to the
r th esion(NERC}]
SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT. It shall
be mandatory for the [NERC] DOLE SECRETARY to conduct continuous
hearings and decide the dispute within twenty (20) calendar days from the
time said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any
way delay the applicability of any increase in prescribed wage rates pursuant
to the provisions of law or wage order.


As used herein, a wage distortion shall mean a situation where an increase
in prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and
among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.

All workers paid by result, including those who are paid on piecework, takay,
pakyaw or task basis, shall receive not less than the prescribed wage rates
per eight (8) hours of work a day, or a proportion thereof for working less
than eight (8) hours.

All recognized learnership and apprenticeship agreements shall be
considered automatically modified insofar as their wage clauses are
concerned to reflect the prescribed wage rates.

Section 7. Amount of National Minimum Wage. Upon effectivity of this Act, the
daily statutory minimum wages of private sector workers in both agricultural and
non-agricultural enterprises nationwide shall be increased TO A UNIFORM
NATIONAL MINIMUM WAGE RATE OF SEVEN HUNDRED AND FIFTY PESOS
(P750.00). Provided, that the wage increases arising from the new national
minimum wage rate should not prejudice other wage increases through collective
bargaining.

Subsequent to the implementation of a Uniform National Minimum Wage Rate of
P750.00, the National Minimum Wage shall be adjusted on an annual basis by the
President upon the signing into law prescribing a national minimum wage increase.

Section 8. Credible Wage Increase. No wage increase arising from collective
bargaining agreements shall be credited as compliance with the increases
prescribed under the Act.

Section 9. Prohibition on layoffs and downsizing. It shall be unlawful for a
company, corporation, partnership or any other entity engaged in business to lay
off workers or resort to downsizing on the mere basis of complying to the payment
of wage increases arising from the establishment of the national minimum wage.

Section 10. Penalties. Section 12 of Republic Act of 6727 which was amended by
Section 1 of Republic Act 8188 is hereby further amended to read as follows:

Section 12. Any person, corporation, trust, firm, partnership, association or entity
which refuses or fails to pay their workers the national minimum wage set herein
and any of the succeeding legislated wage increases or adjustments in accordance

with this Act shall be punished by a fine net Jeoe-than Twenty-five thousand pesos

SHALL BE FIXED AT ONE HUNDRED PERCENT (100%) OF THE TOTAL AMOUNT
OF THE WAGE INCREMENT DUE THE EMPLOYEES TO BE MULTIPLIED BY THE
NUMBER OF WORKING DAYS THE WAGE INCREMENT HAS BEEN UNPAID TO


THE EMPLOYEES or imprisonment of not less than {twe-{2)] THREE (3) years nor
more than ffeur(4}] FIVE (5) years, or both such fine and imprisonment at the
discretion of the court. Provided, That any person convicted under this Act shall
not be entitled to the benefits provided for under the Probation Law.

‘The employer concerned shall be ordered to PAY THE EMPLOYEES MORAL
DAMAGES OF FIFTY THOUSAND PESOS (P50,000.00) EACH EMPLOYEE PLUS an
amount equivalent to double the unpaid benefits owing to the employees: Provided,
That payment of MORAL DAMAGES AND indemnity shall not absolve the employer
from the criminal liability imposable under this Act.

FURTHERMORE, THE BUSINESS PERMIT OF THE VIOLATING ENTITY SHALL BE
SUSPENDED FOR ONE (1) MONTH TO THREE (3) YEARS FOR SECOND
OFFENSES; FOR THIRD OFFENSES, THE BUSINESS PERMIT OF THE OFFENDER
SHALL BE CANCELLED.

If the violation is committed by a corporation, trust or firm, partnership,
association or any other entity the penalty of imprisonment shall be imposed upon
the entity's responsible officers, including, but not limited to, the president, vice-
president, chief executive officer, general manager, managing director or partner.

‘The Department of Labor and Employment shall have the authority to impose such
other administrative penalties it sees fit to impose under the circumstances of each
case of violation.

Section 11. Constitutionality. Should any provision of this Act be declared
invalid or unconstitutional, the validity of the other provisions shall not be affected
thereby.

Section 12. Repealing Clause. All laws, orders, issuances, rules and regulations
or parts thereof inconsistent with the provisions of the Act and this Rules are
hereby repealed, amended or modified accordingly.

Section 13. Effectivity. This Act shall take effect fifteen (15) days after its
publication in two (2) newspapers of general circulation.

Approved,