Minimum wage increase in NCR from P481 to P491 effective June 2, 2016

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On May 17, 2016,  Wage Order No. NCR-20 was approved by the Regional Tripartite Wages and Productivity Board – National Capital Region (NCR) which increases the minimum wage in the NCR from the previous P481.00 to P491.00 (or a P10.00 increase). The wage order was published in The Philippine Star on May 18, 2016. This is effective June 2, 2016.

Upon effectivity of the said wage order, the P15.00 cost of living allowance (COLA) per day under Wage Order No. NCR-19 shall be integrated into the basic wage and a new COLA of P10.00 per day shall be added.

This covers the Cities of Caloocan, Las Pinas, Makati, Malabon, Navotas, Mandaluyong, Manila,  Marikina, Muntinlupa, Paranaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela, and the Municipality of Pateros.

The new daily minimum rates of covered workers in private sector in the NCR shall be as follows:

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Sector/Industry Basic Wage COLA Integration New Basic Wage New COLA New Minimum Wage Rates
Non-Agriculture
including Private Hospitals with bed capacity of 100 or less
P 466.00 P 15.00 P 481.00 P 10.00 P 491.00
Agriculture (Plantation and Non Plantation) P 429.00 P 15.00 P 444.00 P 10.00 P 454.00
Retail/Service Establishments employing 15 workers or less P 429.00 P 15.00 P 444.00 P 10.00 P 454.00
Manufacturing Establishments regularly employing less than 10 workers P 429.00 P 15.00 P 444.00 P 10.00 P 454.00

 

For the full list of minimum wage in different regions around the country, please visit the website of National Wages and Productivity Commission.

Companies, especially those that are employing minimum wage earners, may need to re-visit there compensation packages to align with this increase, although there may be companies who can apply for exemption. They should ensure compliance to avoid labor disputes and eventually lossing more.

For most of the employees earning minimum wage, P10.00 a day is never enough to sustain their everyday needs, considering the ever increasing prices of goods and services today. While the inflation rate in 2015 plays around 1.4% to 1.6%, the wage increase only approximate such increase. This means that minimum wage was just increase to coup up with inflation, and is not really meant to increase the purchasing power of minimum wage earners.

It should be noted that in 2008, a law was passed exempting minimum wage earners from income tax, and thus, from withholding tax on compensation, including the overtime premiums, hazard pay and night differential pay. If, aside from salaries, the minimum wage earner earns taxable income from other sources (e.g. business), they are still not subject to withholding tax, but are subject to income tax. Exempting minimum wage earners from tax has significantly benefited them but is never sustainable. This is the reason why they keep on looking for opportunities to earn more, including the possibility of leaving the country to work abroad.

Until such time that the minimum wage is sufficient to give Filipinos a decent leaving, we can never consider Philippines a progressive country.

To download Wage Order No. NCR-20 and its implementing rules, Click Here!

Important Update: Meanwhile, the National Economic Development Authority, late in June 2016 said that a family of four (4) has to have a monthly gross income of P120,000.00 to live a “simple and comfortable” life.

A Filipino family of four must earn a gross monthly income of P120,000 to attain a “simple and comfortable” life these days, according to the National Economic Development Authority (NEDA). The agency defined “simple and comfortable life” as earning enough money for day-to-day needs, having the capability to send children to college, owning a medium sized home and a car, and being able to take occasional trips around the country.

Now let us compare the minimum wage to the wage that we need to have to live a “simple and comfortable” life. The minimum wage is just around 10% of the salary that we need to earn to live a “simple and comfortable” life. This means that you minimum wage earners need to earn 10 time of their current salaries. So how is that? Clearly, there is a problem, but how to solve this problem is but a bigger problem.

Read more about this, What ‘simple, comfortable’ Filipino life looks like, according to NEDA.

Share us your thoughts! Let us know what you think! 🙂


Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!



Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

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