Private company workers who do not fall under minimum wage earners category may or may not directly benefit from the P85 daily wage increase.

The term is “may or may not benefit” since the decision on whether or not salary adjustment would also be implemented for non-minimum wage earners depends on the outcome of the Collective Bargaining Agreement (CBA) between the employers and officials of workers’ organizations.

And in the absence of CBA, Department of Labor and Employment (DOLE) Secretary Francis Tolentino said it is the call of the management or employers to address what he described as wage distortion.

Wage distortion happens when the government-mandated wage increase narrows or eliminates the pay differences between groups of employees—the higher pay is usually based on skills, seniority, or responsibilities.

“But definitely, their (non-minimum wage earners) salary will not decrease. There will be wage distortion that can be addressed through through CBA or if there’s no CBA, the employers can do so,” said Tolentino.

Lawyer Kenneth Chua, member of the Legislative Committee of the Information Technology and Business Process Association of the Philippines (IBPAP), explained that the adjustment being made by employers to address wage distortion is usually being done by private companies to retain their employees.

“When there's minimum wage increase, the non-minimum wage earners do not directly benefit, but indirectly they can benefit because sometimes the salary is adjusted through CBA or through own discretion of the management to retain their employees,” said Chua, who was the invited guest speaker during the DOLE’s flag-raising ceremony.

“Otherwise if the employees are not happy, they can transfer to other companies,” he added.

The first tranche of the P85 daily wage increase will take effect on July 25 with a P60 hike. The second tranche will be in January next year for the remaining P25.

The first tranche was initially announced to be on July 19 but the delay in the publication due to typhoons and other factors affected the date of implementation for just a few days,

DOLE also clarified that the wage increase will only cover those in Metro Manila.

And Tolentino expressed confidence of compliance from Metro Manila-based companies, citing the history of high compliance rate in the National Capital Region (NCR).

In the last wage increase of P50 for instance, he said DOLE monitored 95 percent compliance from NCR companies—the same compliance rate that he expects for the P85 wage hike.

Others to follow

Currently, Tolentino said there is an ongoing consultation by the Regional Tripartite Wages and Productivity Board to various stakeholders in relation to another round of wage hike.

He said the next regions that may likely announce the wage increase are Calabarzon, Central Luzon and Central Visayas.

Tolentino also pointed out that DOLE will also honor exemption from wage increase like micro enterprises, those with under 10 employees and barangay-registered small companies.