Wage Distortion

Question 1

Definition of Labor Standards

Question 2

What is a wage order?

Answer 2

Wage refers to the order promulgated by the Regional Tripartite Wage and Productivity Board pursuant to its wage-fixing authority.

Question 3

Basis of Wage Order

Answer 3

Whenever conditions of the region so warrant the Regional Tripartite Wage and Productivity Board shall investigate it.

Criteria in the determination:

1. Needs of workers and their families

2 Demand for living wage

3. Wage adjustment visa vis consumer price index
4. Improvements in standards of living
5. Capacity to pay
6. Social development

Question 4

What is wage distortion

Answer 4

A situation where the application of a mandated wage increase results in the elimination or severe contraction of existing salary differentials among employee groups in an establishment.

1. Elimination of the quantitative rates of the wage or salary;
2. Severe contraction

Question 5

What are the elements of wage distortion?

Answer 5

1. Existing heirarchy of positions with corresponding salary rates
2. Significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one
3. Elimination of the distinction between two levels
4. Existence of the distortion in the same region of the country

Question 6

What are the procedures to correct wage distortion?

Answer 6

For organized firms, the employer and the workers’ union shall negotiate through the grievance procedures incorporated in their Collective Bargaining Agreement. If still unresolved, the parties may push through with the process of voluntary arbitration.

For unorganized firms, the management and labor sector shall discuss and agree on the method to correct wage distortion. Any dispute arising thereof shall be settled through the National Conciliation and Mediation Board. If negotiations fail, the National Labor Relations Commission may intervene through compulsory arbitration.

Question 7

Wage distortion formula? Distortion Adjustment

Answer 7

Minimum wage = percentage x the prescribed increase

Question 8

Are differences in regional assignment between workers occupying the same position within a company considered wage distortion?

Answer 8

No. Wage distortion involves comparison of salary rates between workers within a company located within the same region