The 697th General Membership Meeting of the People Management Association of the Philippines (PMAP) took place on July 31, 2024, via Zoom. The meeting focused on two crucial topics: pay transparency and navigating wage increases. The speakers for the event were Chantal Querubin from Willis Towers Watson and Atty. Grace Mana-ay Badilla from the National Wages and Productivity Commission (NWPC).
Compensation Trends: Key to Pay Transparency as a Strategic Corporate Agenda
Presented by Chantal Querubin
In 2024, pay transparency legislation is gaining traction worldwide as countries seek to address the gender pay gap. These laws require companies to report on their gender pay gap and include salary ranges in job advertisements. For example, the European Union (EU) adopted the Pay Transparency Directive in April, aiming to reduce the gender pay gap at a national level. In the United States, approximately one in five workers is covered by salary transparency laws, with variations between states. California, for instance, now requires companies to list salaries on job postings and allows employees to request pay ranges.
The global impact of pay transparency is significant. On average, women in the EU earn 13% less than men per hour, resulting in substantial lost wages. The World Economic Forum predicts it will take 169 years to close the global economic gender gap, underscoring the urgent need for pay transparency.
The EU Equal Pay and Transparency Directive, which must be implemented by EU member states by June 2026, sets a new standard for pay transparency and will bring pay scale disclosure across Europe.
Different types of pay transparency legislation include:
- Pay transparency for jobseekers
- Salary history bans
- Gender pay gap reporting and audits
- Employee rights to request information
- The burden of proof for wage discrepancies
However, implementing pay transparency presents challenges, including cultural shifts, administrative burdens, market sensitivity, employee relations, legal compliance, data privacy, and equity adjustments. Organizations must navigate these complexities while considering pay equity and transparency as integral parts of their Environmental, Social, and Governance (ESG) agenda.
Brace for Change: Navigating the Upcoming Wage Increase
Presented by Atty. Grace Mana-ay Badilla
The National Wages and Productivity Commission (NWPC) plays a crucial role in shaping labor policies, particularly concerning minimum wage adjustments. Let’s explore the key aspects:
Concept of Minimum Wage
The minimum wage represents the lowest rate an employer can legally pay its workers. Its purpose is to protect vulnerable workers from unjustly low pay. Approximately 4.2 million minimum wage earners nationwide rely on this crucial standard.
Wage Rationalization Acts
- R.A. 6727 (1989):
This act covers minimum wage earners in private establishments and aims to:- Rationalize minimum wage determination regionally.
- Strengthen the link between wages and productivity through gainsharing schemes.
- Create the NWPC and the 16 RTWPBs (Regional Tripartite Wages and Productivity Boards).
- R.A. 10361 (2013): This legislation specifically covers domestic workers or “kasambahay.”
Recent Minimum Wage Increase in NCR
Effective July 17, 2024, the daily minimum wage for non-agricultural workers in the National Capital Region (NCR) increased to P645. For workers in agriculture and small service/retail establishments employing 15 workers or fewer, the new minimum wage is P608. This adjustment addresses concerns about rising inflation rates and productivity.
Addressing Wage Distortions
Wage distortions occur when pay adjustments create unfair wage differences among employees. The NWPC issued an advisory on correcting wage distortions, emphasizing the need for equitable compensation practices. The PINEDA FORMULA is used to calculate wage distortion adjustments:
Wage Distortion Adjustment = (Employee’s Current Wage / Previous Minimum Wage) × Mandated Wage Increase
NWPC and RTWPBs Initiatives
- Conducting learning sessions and information campaigns on wage orders to educate employers.
- Assisting enterprises in resolving wage distortion issues.
- Organizing wage clinics to orient employers about new wage orders, including considerations for wage distortion.
Final Thoughts
The 697th PMAP General Membership Meeting provided valuable insights into the evolving landscape of compensation trends and wage policies. By understanding and adapting to these changes, organizations can ensure compliance, promote fairness, and enhance their overall strategic agenda in today’s dynamic labor market.
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