(Updated for 2023)
Curious about the current minimum wage in Manila for 2023?
In this blog post, we'll give you the latest updates on Manila's minimum wage rates, helping you understand the financial landscape and its implications for employees and businesses alike.
Read on as we explore the numbers and shed light on the factors influencing minimum wage policies.
What is the Minimum Wage?
The minimum wage refers to the lowest compensation you must pay your employees. Generally, a collective bargaining agreement (CBA) or an individual contract can’t decrease the determined minimum wage.
Current laws, decisions from qualified authorities, wage boards or councils, or industrial or labor courts or tribunals can set minimum wages. Sometimes, collective agreements help authorities determine minimum wages if courts of law recognize their clauses.
Philippine minimum wage rates depend on the region, province, or locality. The National Wages and Productivity Commission (NWPC) and Regional Tripartite Wages and Productivity Boards (RTWPBs) determine and adjust these rates.
Why Set a Minimum Wage?
The minimum wage refers to the legally mandated lowest hourly or monthly pay rate you must give to your workers. It serves as a crucial mechanism to protect employees from exploitation and ensure fair compensation for their labor.
Establishing a minimum wage allows governments to safeguard workers' rights, promote social equality, and prevent unfair wage practices. This essential measure helps provide workers with a decent standard of living, reduces income inequality, and contributes to a country’s overall economic stability.
How Does the NWPC Set Minimum Wage Rates?
The NWPC uses a two-tiered wage system (2TWPS) to reduce the unexpected outcomes of mandated minimum wage, ensure vulnerable sectors receive sufficient pay, and encourage better productivity and gain-sharing.
In the 2TWPS, the mandatory minimum wage becomes the first tier, with a voluntary productivity-based pay scheme below it. The NWPC and Regional Boards consider these factors when setting the minimum wage:
- 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
What is the Current Minimum Wage in Metro Manila?
Last June 26, 2023, the National Capital Region Wage Board announced a ₱40 minimum wage increase through Wage Order No. NCR-24. Here’s a simple breakdown of the current minimum wage rates in Metro Manila to help you understand the increase.
|Previous Minimum Wage
|New Wage Increase
|New Minimum Wage Rate
|Agriculture (Plantation & non-plantation)
|Service or retail establishments with 15 employees or less
|Manufacturing companies with
less than 10 workers
With the prices of basic goods and products rising, multiple labor groups filed petitions to raise the daily minimum wage to help Philippine workers afford these necessities. Their appeals influenced the latest minimum wage hike, which met the specific criteria stated in Republic Act No. 6727 or the Wage Rationalization Act.
More importantly, the new basic minimum wage in Metro Manila covers an employee’s regular eight-hour work schedule.
Are Minimum Wage Rates Adjusted for Inflation?
The current minimum wage rates in Metro Manila are called nominal wages, a fixed amount set by the Philippine government. They’re expressed at current prices.
Meanwhile, the real minimum wage is the amount expressed at constant prices and adjusted for inflation. The IBON Foundation recently reported that this value stood at ₱483, the lowest real wage employees have received in 12 years.
When Do the NWPC’s Regional Boards Issue a Wage Order?
The Regional Boards usually issue a Wage Order once a year. After implementing the new decree, the Boards can only consider and grant wage hikes if situations such as oil price hikes arise. These authorities determine whether subsequent cases exist, which the NWPC verifies.
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 whether to publish one. The Boards schedule public hearings before issuing a Wage Order, then decide 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 Boards must publish the new rules within 30 days from the last hearing, and covered regions must implement them 15 days after they’re published in local newspapers.
Who Can Earn Minimum Wage in the Philippines?
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.
Who’s Exempted from Receiving It?
Some employees aren’t entitled to the current minimum wage rate. According to the NWPC, kasambahays or domestic workers and people personally working for another party 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, you can do so within 75 days from when the NWPC publishes a Wage Order’s Implementing Rules and Regulations (IRR). It’s best to submit your application early, as the department doesn’t grant extensions.
Remember that a qualified firm’s exemption period lasts only a year. After that, the NWPC and Regional Boards will require the employer to pay their workforce the minimum wage. Both agencies can take legal action against non-complying businesses under the clauses of Section 12 of RA No. 6727, as amended by RA 8188.
Ensure Proper Compensation for Your Employees
Meeting the minimum wage requirement helps ensure your workforce meets their basic, day-to-day needs. Yet, changing minimum wage rates complicate employee wage computations, especially if you perform them manually.
A streamlined payroll system ensures accurate salary calculations for faster payments and fewer disputes. Address payroll challenges and stay business growth-ready with the Sprout Ecosystem. Learn more about our holistic suite of tools from our HR tech experts, or visit our blog for more labor updates and actionable insights.