National Wages and Productivity Commission(NWPC)

Dear Ms. Langga, This refers to the request you made thru the Commission’s e-FOI portal regarding the factors affecting the increase/decrease in minimum wages and the formula for determining such. Republic Act No. 6727 or the Wage Rationalization Act prescribes ten relevant factors, grouped into three categories, in determining minimum wage: a. Needs of workers and their families - demand for living wage - wage adjustment vis-à-vis Consumer Price Index (CPI) - cost of living and changes therein - needs of workers and their families - improvements in standards of living b. Capacity to pay of employers/industry - fair return on capital invested and capacity to pay of employers - prevailing wage levels c. Requirements of economic and social development - need to induce industries to invest in the countryside - effects on employment generation and family income - equitable distribution of income and wealth along the imperatives of economic and social development After considering these factors, the Regional Tripartite Wages and Productivity Boards (RTWPBs) set a minimum wage that is higher than the poverty threshold but lower than the average wage considering erosion of wages, computed using the latest data on Consumer Price Index (CPI). Thank you.