(DP 1983-01) A Review of Minimum Wage Fixing in the Philippines After World War II

Abstract

This study looks at the minimum wage fixing in the Philippines after World War II. The rationale for such a wage policy is discussed, followed by a description of the guidelines observed in the setting of wage differentials in the legislations. Then the coverage and implementation of the minimum wage legislations are assessed. It also presents a theoretical framework for evaluating the impact of minimum wage fixing on employment, output, prices and incomes. The paper concludes with a proposal for an alternative wage policy for the Philippines. This review minimum wage-fixing in the Philippines exposes the general weakness of this wage policy in maintaining worker's income at subsistence level because it does not include the incomes of employers and price movements given the productivity changes at the firm level. In addition, the coverage of the wage policy has been limited and its implementation poor. Under these circumstances an alternative wage policy is proposed which takes cognizance of the relative sharing of income between the workers and the employers and which allows the two sectors to negotiate over the minimum wage and other wage supplements at the firm level.