The Department of Labor and Employment (DOLE) yesterday urged establishments

covered by new wage orders to quickly adjust their wage structures to correct any wage
distortions.
“RA 6727 or the Minimum Wage Fixing Law provides for methods for correcting wage
distortions, and companies and establishments should readily avail of these methods to
avoid unnecessary disputes,” a statement of the DOLE said. The provision for
correcting wage distortions is also stipulated in all wage orders being issued by the
Regional Tripartite Wages and Productivity Boards (RTWPBs), it added.
The DOLE cautioned that if the "distortion" in the salary rates of workers is not
corrected, it could lead to demoralization that, in turn, could disrupt the harmonious
work relationships between and among workers and employers in the establishments.
The DOLE encourages employers and workers to immediately work on correcting wage
distortions to avoid demoralization among workers as this could affect productivity in the
workplace.
The National Wages and Productivity Commission (NWPC) has suggested formulas
that would address wage distortion. One of the suggested formulas is by computing the
previous minimum wage over the worker's current daily rate multiplied by the amount of
the latest mandated wage increase.
Wage "distortion" occurs when the usual differentials in wage rates between groups of
employees in an establishment are drastically reduced or eliminated due to mandated
wage increases. This means that the differences in wage structure based on skills,
length of service, or other logical bases of differentiation may be eliminated if the other
employees already receiving more than the minimum wage will not also have a
corresponding increase in their salaries. Restoring a substantial or significant gap, as
against the historical wage differentials, is allowed under existing jurisprudence.
In unionized firms, the employer and the union should negotiate to correct the distortion
using the grievance procedures in the collective bargaining agreement or CBA or, if the
dispute remains unresolved, through voluntary arbitration
In unionized firms, employers and workers should also endeavor to correct the
distortion. Any dispute is settled by conciliation through the National Conciliation
and Mediation Board (NCMB), or if it remains unresolved, by compulsory arbitration
through the National Labor Relations Commission (NLRC).
To date, the minimum wages have been adjusted in eight regions, namely, NCR and in
Regions VI (Western Visayas); VII (Central Visayas); IX (Zamboanga Peninsula); X
(Northern Mindanao; XI (Southern Mindanao); XIII (CARAGA) and in the ARMM.
For more details on wage distortion, please contact the NWPC at 527-5522 or 527-5139
and www.nwpc.gov.ph.
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