Living Wage Act

TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) 25 JUL -7 A9:33 First Regular Session SENATE S. No. — Introduced by Senator Loren Legarda AN ACT ESTABLISHING THE STANDARDS FOR A LIVING WAGE, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED EXPLANATORY NOTE According to the International Labour Organization (ILO), over half of the global workforce are wage earners. This means that, for many households, the primary source of income is wages. However, the ILO also noted that millions of workers earn wages "too low to afford a decent standard of living". 1 In the Philippines, a data report from the Ibon Foundation as of January 2025 illustrates a significant disparity between the national average daily minimum wage, which is P469, compared to the average family living wage of P1,237. This reflects an average wage gap of P762 for all working Filipinos.? Last year, 2024, the ILO reached an agreement regarding the concept of living wage, with experts defining it as "the wage level that is necessary to afford a decent standard of living for workers and their families, taking into account the country circumstances and calculated for the work performed during the normal hours of work, calculated in accordance with the ILO's principles of estimating the living wage, to be achieved through the wage-setting process in line with ILO principles on wage 1 Retrieved June 26, 2025, from: International Labour Organization on Living Wages. https://www.ilo.org/living-wages. 2 Retrieved June 26, 2025, from: IBON Foundation. (2025, February 6). Minimum wage and family living wage per region, as of January 2025. https://www.ibon.org/flw-regl-2501/

setting."3 The most recent findings available in the 2023 study by PWC and Wage Indicator reveal a global trend where 24% of employers currently pay a living wage, while 54% of employers expect to do so in the next five years.4 The Philippine Constitution mandates that all workers shall be entitled to a living wage (Section 3, Article XIII, 1987 Constitution), among other labor rights such as security of tenure and humane conditions of work. Although Republic Act No. 6727 or the Wage Rationalization Act includes living wages as a factor in wage-setting, the reality on the ground remains far from this goal. By amending Article 124 of Presidential Decree No. 442, or the Labor Code of the Philippines, this measure seeks to institutionalize the living wage as the new benchmark for regional minimum I wage-setting. One that is data-driven and transparent, one that will facilitate assistance to families to meet their basic and essential needs, including adequate food, shelter, education, healthcare, and social participation. Thirty-six years have passed since the enactment of the Philippine Labor Code, and the standards and assumptions that shaped wage policies in 1989 are no longer responsive to the needs of the modern Filipino worker. After more than three decades, it is time to update the wage-setting framework to reflect the country's current labor realities. This would also reaffirm the Constitutional promise of decent work and just compensation. In view of the foregoing, the immediate passage of this bill is earnestly sought. LOREN LEGARDA 3 Retrieved June 26, 2025, from: the International Labour Organization. (2024, March 15). ILO reaches living wages. https://www.ilo.org/global/about-the- agreement ilo/newsroom/news/WCMS_918717/lang-- en/index.htm#:~:text=The%20agreement%20says%20that%20the,and%20local%20contexts%20an d%20socio%2D 4 Retrieved June 26, 2025, from: PWC. (2023, October). Living wage: An emerging standard. https://www.pwc.com/gx/en/services/tax/assets/global-living-wage-report.pdf

""" TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) JUL -7 A9:33 First Regular Session SENATE S. No. — Introduced by Senator Loren Legarda AN ACT ESTABLISHING THE STANDARDS FOR A LIVING WAGE, AMENDING FOR THE PURPOSE PRESIDENTIAL DECREE NO. 442, OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES, AS AMENDED Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. — This Act shall be known as the "Living Wage Act".

Sec. 2. Article 124 of Presidential Decree No. 442, as amended and

renumbered, is hereby amended to read as follows: "ART. 124. Standards/Criteria for Minimum Wage Fixing. - The regional minimum wages to be established by the Regional Board shall [be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well being of the employees within the framework of the national economic and social development program] MEET THE LIVING WAGE THAT IS NECESSARY TO AFFORD A DECENT STANDARD OF LIVING FOR WORKERS AND THEIR FAMILIES. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: (a) [The demand for living wages] ESTIMATION OF THE NEEDS OF WORKERS AND THEIR FAMILIES, INCLUDING BUT NOT LIMITED TO FOOD, CLOTHING, SHELTER,

HEALTHCARE, EDUCATION, CONDUCTED THROUGH TRANSPARENT AND EVIDENCE-BASED METHODOLOGIES IN CONSULTATION WITH TRIPARTITE INDUSTRIAL PEACE COUNCILS (TIPCS); (b) Wage adjustment vis-a-vis the consumer price index; (c) [The] CHANGES IN the cost of living and [ehanges or increases therein] PATTERNS OF CONSUMPTION; [(d) The needs of workers and their families;] (D) The need to induce industries to invest in the countryside; (E) Improvements in standards of living; (F) The prevailing wage levels; (G) [Fair return of the capital invested and e]Capacity to pay of employers; (H) Effects on employment generation and family income; and (L) The equitable distribution of income and wealth along the imperatives of economic and social development. XXX"

Sec. 3. Implementing Rules and Regulations. — Within ninety (90) days from

the effectivity of this Act, the Department of Labor and Employment, in coordination with the Tripartite Industrial Peace Councils and other relevant stakeholders, shall promulgate the rules and regulations for the effective implementation of this Act.

Sec. 4. Separability Clause. - If any portion or provision of this Act is declared

unconstitutional, the remainder of this Act or any provision not affected thereby shall remain in force and effect.

Sec. 5. Repealing Clause. - Any law, presidential decree or issuance, executive

order, letter of instruction, rule or regulation inconsistent with the provisions of this Act is hereby repealed or modified accordingly.

Sec. 6. Effectivity. - This Act shall take effect after fifteen (15) days following

its complete publication in the Official Gazette or a newspaper of general circulation. Approved,