2024 Minimum Wage in Manila: New Rates and Key Insights

Since the pandemic, the average salary increase for Filipino workers has steadily risen over the past few years. A recent survey reports that companies expect to increase their median salary budget by 5.7% this year.

In this post, we’ll cover the latest wage rates in Manila and explore how these changes might affect you—whether you’re an employee or an employer.

The minimum wage refers to the lowest compensation you must pay your employees. Generally, even a collective bargaining agreement (CBA) or individual contract can’t lower this set amount.

Current laws, wage boards, or labor courts can set minimum wages. Collective agreements can also influence these rates if recognized by the courts.

In the Philippines, minimum wage rates vary by region, province, or locality. The National Wages and Productivity Commission (NWPC) and Regional Tripartite Wages and Productivity Boards (RTWPBs) set and adjust these rates.

Minimum wage laws are essential for helping low-wage employees meet their basic needs and enhance their quality of life. It serves as a crucial mechanism to ensure fair compensation for their labor and protect employees from exploitation.

Setting a minimum wage helps protect workers’ rights, promote social equality, and prevent unfair pay practices. It ensures workers have a decent standard of living, reduces income inequality, and supports economic stability.

The NWPC uses a two-tiered wage system (2TWPS) to manage the effects of the minimum wage and ensure vulnerable sectors receive fair pay. It also encourages better productivity and gain-sharing.

In this system, the first tier is the mandatory minimum wage. The second tier is a voluntary, productivity-based pay scheme. The NWPC and Regional Boards consider several factors when setting minimum wage rates:

• The needs of workers and their families
• The employer’s capacity to pay wages
• Comparable wage and income
• The requirements for economic and social development

The RTWPB in Metro Manila has signed Wage Order No. NCR-25, approving the ₱35 increase to existing daily rates.

Starting July 17, 2024, the minimum wage for non-agriculture workers in the private sector will be ₱645. For employees in agriculture, service, retail, or manufacturing businesses with 15 or fewer workers, the rate will be ₱608.

Here’s a simple breakdown of the National Capital Region’s (NCR) current minimum wage rates to help you understand the increase.

A table illustrating the new minimum wage rates in Metro Manila for 2024

As the cost of basic goods rose, several labor groups filed petitions to increase the daily minimum wage. Their efforts led to the recent hike, which meets the criteria of Republic Act No. 6727, also known as the Wage Rationalization Act.

More importantly, the new basic minimum wage in Metro Manila covers an employee’s regular eight-hour work schedule.

Metro Manila’s minimum wage rates, known as nominal wages, are set by the government and expressed at current prices.

In contrast, the real minimum wage is the amount expressed at constant prices and adjusted for inflation.

Metrobank Wealth Insights estimates that today’s ₱645 wage is worth around ₱508.7 when adjusted for inflation. Although the ₱35 nominal increase is lower than last year’s ₱40, the real increase is greater due to lower inflation this year.

Regional Boards typically issue a Wage Order once a year. After a new order is implemented, they can only consider further increases if specific conditions arise, like oil price hikes. The NWPC then verifies these cases.

But, you may ask, what if the Regional Boards receive no wage increase petitions? In this case, they can still issue a Wage Order or decide not to publish one. Public hearings are scheduled before a decision is made, based on the arguments presented.

Once the Regional Boards deem a wage increase necessary through current procedures, they can issue a Wage Order within 90 days. The new rules must be published within 30 days of the last hearing and implemented 15 days after being published in local newspapers.

The NWPC’s minimum wage policy applies to all workers in the private sector, regardless of their job title, employment status, and type of compensation.

Some employees aren’t entitled to the current minimum wage rate. According to the NWPC, kasambahays, domestic workers, and those who work for individuals don’t receive the minimum wage.

Moreover, the Philippine Regional Boards may exclude some businesses from providing minimum wage, including:

• Distressed establishments such as:
  • Corporations or cooperatives
  • Single proprietorships or partnerships
  • Non-stock, non-profit organizations
  • Banks and quasi-banks
  • Establishments under corporate rehabilitation
• New business enterprises
• Service or retail establishments with a minimum of 10 employees
• Organizations adversely affected by calamities
• Other companies that meet the NWPC’s criteria for wage exemption and with justifiable reasons

If you’re applying for exemption, do so within 75 days of the NWPC publishing a Wage Order’s Implementing Rules and Regulations (IRR). It’s best to submit your application early, as the department doesn’t grant extensions.

Keep in mind, the exemption period lasts only a year. After that, employers must pay their workers the minimum wage. The NWPC and Regional Boards can take legal action against non-complying businesses under Section 12 of RA No. 6727, as amended by RA 8188.

Meeting the minimum wage ensures your employees can cover their basic needs. However, changing wage rates can complicate payroll calculations, especially if done manually.

A streamlined payroll system ensures accurate salary calculations for faster payments and fewer disputes. Address your payroll challenges and get your business growth-ready with the Sprout Ecosystem.

Talk to our HR tech experts today, or visit our blog for more labor updates and actionable insights.