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Labor Matters

Minimum wage earners in the Philippines and their standing

Have you ever wondered, of the total number of employed individuals in the Philippines, what is the percentage of minimum wage earners?  Let’s include those earning less than the minimum, what will the figures be?

Ever wondered how many employees were celebrating everytime they know that a new wage order has been passed increasing the minimum wage rate and how may of them are frustrated knowing that such increase is just “n%” of their current salary and didn’t even feel that there is an increase at all?

Philippine Minimum Wage Earners Statistics

I’ve searched the internet but I couldn’t find any statistics of minimum wage earners.  I bet if we will use the internet to survey the statistics of minimum wage earners in the Philippines, it will somehow be a misrepresentation because most of them have blue collar jobs but, we’ll try to see what we can get.

Please participate in the survey below for us to find out:

Help us gather information.  Share this form:  https://docs.google.com/forms/d/1vMabYETAc7RhLp5vkDDTvCrzmckhKXxTaRi58qZ4_iU/viewform

Based on the latest results of the survey, 73% are minimum wage eaners and 27% are earning more than minimum.  Keep answers coming! 😉

Wage Rate of Minimum Wage Earners

Just recently,  the Regional Tripartite Wage and Productivity Board of the National Capital Region (RTWPB-NCR) has approved a P10 increase in the minimum wage in Metro Manila.  Upon effectivity of such increase, the minimum wage rate in Metro Manila will be P466 consisting of P436 basic wage and P30 cost of living allowance (COLA).  P15 of the P30 COLA will be integrated to the basic wage on January 1, 2014.

For all other parts of the country, please refer to this tables:

Tax on Compensation of Minimum Wage Earners

Minimum wage earners are exempt from income tax.  That is not totally true.

Minimum wage earners can be exempt from income tax and consequently from withholding tax if the taxpayer has no other source income but his or her compensation from being employed.  And yes, even 13th month pay, hazard pay, overtime pay, and night differential pay are exempt from income tax.

The not-so-good side of it is when you compare an employee earning above minimum by, let’s just say, P1,000 with no overtime work versus an employee earning minimum wage with overtime work, the minimum wage earner will obviously get a higher take-home pay that the employee earning above minimum, contributed to that was the tax withheld from the latter.

There may be additional compensation being given to the minimum wage earners such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P30,000.00, taxable allowances and other taxable income other than the statutory minimum wage, holiday pay, overtime pay, hazard pay and night shift differential pay.  These employees shall not enjoy the privilege of being a minimum wage earner and, therefore, his/her entire earnings are not exempt from income tax and, consequently, from withholding tax.

To learn more on the tax side, please refer to this post –> Click Here, or to the Revenue Regulations (RR) No. 10-2008.

Spending Pattern of Minimum Wage Earners

What can a minimum wage actually buy?  How are minimum wage earners saving and spending their take-home pay?

Maybe we need to categorize differentiate those:

  • With other source of income or no other source of income
  • With own house and car or no own house and car
  • With dependents or without dependents
  • Generally allowed to work overtime or generally not allowed
  • Into savings or into spending

In addition, factors such as distance from work, prices of goods and services in work and at home, quality of goods and services and other personal preferences are affecting the way minimum wage earners spend.

In general, minimum wage earner spend for the basic needs, no more no less.  As minimum wage earners belongs to Class “C” and lower social class, it is expected that they are earning to live unless they have other sources of income, have their own house and car, have no dependents to feed, usually have paid overtime work and are maintaining their savings.

If you have other source of income, you might be a minimum wage earner being an employee but you earn additional bucks to spend for your needs.  Some get part-time jobs commonly called “sideline”, do online job or money making using the internet,  put up their own “sari-sari” stores and the like.

Sometimes even a minimum wage earner have their own house and car, especially those that are home-grown.  They may have acquired these through inheritance, gift or even acquired out of savings.  This puts someone in advantage because no rent needs to be paid and commuting will not waste their time.  The cons probably is the costs of maintenance.

Obviously, if you don’t have dependents to feed or support, your savings is all yours.

Some company do not encourage their employee to work overtime.  For these companies, working overtime strictly requires approval as they need to operate within budget.  For those companies however that prioritizes continuity of work or production, they are into overtime and allow their employees to work in an extended time.  If a minimum wage earner has no other source of income, it is a big help for them to have an overtime work as it increase their take-home pay and their purchasing power.

When people save, they spend less.  That is why those who are into savings have less necessities in mind because they are planning for their future.  Self-discipline is a must for someone who wants to save despite of earning minimum.  Luxuries like high-tech gadgets, ipad, iphone and other “in” smartphones are not their priority.

Social Activities of Minimum Wage Earners

This topic is very much subjective and we really cannot generalize but at least, based on the spending pattern, we can say that it make sense that minimum wage earners really have this kind of social life.

  • Depending on the proximity to shopping centers and considering other expenses, minimum wage earners in the Philippines generally meet with friends once a month, for those highly sociable individual.  Some others with “alcoholic” habit, do drink, and get drunk with their friends one a week.
  • Minimum wage earners often times choose to stay at home after work to watch television shows rather than strolling over the metro, as they are most likely saving their money.
  • Even if earning and saving money is a struggle, minimum wage earners in white collar stay updated with their social networking accounts.
  • Both white collar and blue collar minimum wage earners find it interesting to go unli-call or unli-text with their friends, relatives and strangers.  Texting and calling is actually one thing common to all Filipinos.
  • Most minimum wage earners find it more practical to go to malls and amusement park to stroll and eat in fast foods that to go shopping, obviously.

It would require an extensive study and observation to really know the general attitude of minimum wage earners because their personality becomes the ultimate deciding factor.  However, the restrictions in financial availability left them no choice but to really decrease spending on luxury and focus spending on the basic needs.

Share us your thoughts regarding this topic. 🙂

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About leecpa

Orlando Calundan is a Certified Public Accountant. He has exposures in audit of financial statements of entities in various industries such as real estate, food (quick service restaurants), manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements. http://calundan.co

Discussion

44 thoughts on “Minimum wage earners in the Philippines and their standing

  1. Very informative, thank you for this sir.

    Posted by JRio | January 22, 2014, 7:21 am
  2. Mr Calundan good morning. Does it mean there are no taxes to be imposed on minimum wage earners?
    Thanks!

    Posted by Raymond B. Tribdino. | January 31, 2014, 1:42 am
    • Hi. With regards to income taxes, yes, provided that employees have no other sources of income other than from salaries and wages.

      Posted by leecpa | January 31, 2014, 4:31 am
      • Hi sir! My wife works in a provincial government institution here in laguna. She is still has a job order (JO) status even after 4 years in the job. Now she is a minimum wage earner. I learned from your post that minimum wage earners don’ have income taxes. Well just this December, she was deducted income tax which was said to be for the whole 2013 which lead her losing her entire month’s pay. The institution does not provide payslips for JOs so we really cannot know the details. Is there any law that we can cite in order for them to provide payslips even for JOs? Thanks!

        Posted by russel floyd | February 7, 2014, 3:33 am
      • Hi Russel,

        I am not knowledgeable of the nature of work of JOs but is similar to a contractual employee? Or are they qualified to be contractors or professionals paid with professional fees rather than salaries?

        On payslips, if she’s an employee, there is Republic Act 10361 which provides the following:

        SEC. 26. Pay Slip. – The employer shall at all times provide the domestic worker with a copy of the pay slip containing the amount paid in cash every pay day, and indicating all deductions made, if any. The copies of the pay slip shall be kept by the employer for a period of three (3) years.

        Another thing, if there is anything withheld by the company from her for taxes for her salary or professional fees (if considered professional), there should be a withholding tax certificate issued to her that documents the withholding made. Otherwise, there must be something wrong happening.

        Posted by leecpa | February 7, 2014, 4:10 am
      • Here is the link to the Republic Act I mentioned: http://www.gov.ph/2013/01/18/republic-act-no-10361/

        Posted by leecpa | February 7, 2014, 4:15 am
  3. Hi Sir,

    I need your help. Medyo nguluhan lng po ako minimum wage earner po ako (NCR) may overtime pay minsan pero d nman kalakihan..as you mentioned po sa article na to n minimum wage earner is exempted sa tax as stated din po sa RA 9504.Pero yung employer ko po kinaltasan po ako ng witholding tax semi monthly. Tama po ba yun?Pls. advise po..Thanks..

    Posted by barbiegurl078 | February 26, 2014, 3:23 pm
    • Hi! 🙂

      Baka meron po kayong commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of P30,000. Kasi po, if you have such compensation na pag pinagsama sa minimum na sahod nyo eh above the statutory minimum na po, di po kayo exempt sa income tax at withholding tax. Pero pag wala naman po, dapat po exempt talaga kayo. Natanong nyo na din po ba sa employer nyo bakit?

      Posted by leecpa | February 26, 2014, 5:01 pm
      • D po aabot ng 30,000 sir nasa 11,000-13,000 lng po sir a month kasama n po overtime dun. Tinanong n din po nmin sa finance nmin d rin po kmi mbigyan ng sapat n dahilan. Ang reason lng po nila ay declared employee po kmi so kailangan dw po kaltasan ng tax.

        Posted by barbiegurl078 | February 27, 2014, 2:11 am
      • Eh kahit po declared employee if minimum, di dapat kaltasan. Ibig sabihin ba nyan, may undeclared pa silang employee? Mali po yun pag minimum kayo, unless di naman talaga kayo employee but consultant at professional fee yung bayad sa inyo.

        Posted by leecpa | February 27, 2014, 2:16 am
  4. Yun n nga po sir. anu po kaya pwede nming gawin sir? May miprovide po ba kayo n guidelines para mipakita po nmin sa finance nmin..Thanks po sa tulong..

    Posted by barbiegurl078 | February 27, 2014, 2:42 am
  5. Hi sir… do you have any idea regarding taxation sa mlm members/network marketers

    Posted by sheilah | April 11, 2014, 3:03 am
    • I mean, binabawasan na yung monthly income nila ng 10% – is that final tax or EWT – and is that still subject to other taxes – income tax, percentage, etc…

      Posted by sheilah | April 11, 2014, 3:05 am
      • Hi Shiela, what really is the nature of the income? Salary, commission, professional fees? I am not so familiar with the income structure of MLM but the withholding tax depends on the nature of the income.

        Posted by leecpa | April 22, 2014, 5:07 am
      • commission… we just talked to a BIR personnel and she said it’s still subject to 3% monthly percentage and income tax… AND the 10% is CWT. Thanks for the response…

        Posted by sheilah | April 22, 2014, 2:08 pm
      • Okay, good to hear. You can deduct the CWT against your income tax due. So does that mean you are already registered with the BIR as conducting that type of “business” and you already issue ORs?

        Posted by leecpa | April 22, 2014, 2:51 pm
      • Yes – we have secured the necessary permits and registered with the BIR – but that’s because we opened an outlet in our town. I don’t think other “networkers” register their business, though – as most of them consider the 10% CWT as final tax.In your professional opinion, do you think we have to issue ORs for commissions given by the head office. What if they run up to millions – would we need to register as a VAT business? Thank you…

        Posted by sheilah | May 14, 2014, 3:45 am
  6. Hello Sir,

    My question is if an employee earns P500 in a day (right for example the minimum in a provincial area) is he/she entitled to pay taxes and his/her company where he/she works should also pay taxes since right for example the nature of the business is a call center. What are the exemptions for this company to pay taxes here in the Philippines. Thanks po.

    Posted by Maria | June 23, 2014, 5:36 am
  7. taxable po b ang employee who has a basic salary of minimum (NCR) + 500 pesos transporation allowance?

    Posted by jamesronaldrodriguezjames | September 11, 2014, 6:36 am
    • No. Transportation allowance is not considered de minimis. Dapat ginawa na lang yan uniform allowance, rice allowance, meal allowance eh. Pag transpo allowance kasi di sya de minimis kaya taxable.

      Posted by leecpa | September 11, 2014, 6:44 am
      • ah so s madaling sabi sir, taxable na ang employee with a basic salary of P11,146+500 transpo allowance. thanks po

        Posted by jamesronaldrodriguez | September 12, 2014, 1:02 am
      • Ang tanong eh P11,146 ba ang equivalent monthly ng P466 na minimum ngayon? Kasi if yes, taxable na nga kasi treated na regular allowance yung 500 na di naman de minimis.

        Posted by leecpa | September 12, 2014, 1:13 am
      • ah ok sa madaling sabi taxable n po ang employee with a basic salary of 11,146+500 transpo allowance here in NCR. private sector. thanks po

        Posted by jamesronaldrodriguez | September 12, 2014, 1:09 am
  8. by the way base on Labor Code po b ?

    Posted by jamesronaldrodriguez | September 12, 2014, 1:10 am
  9. Hi Sir, I work for a big company as an admin staff but I am from a third party/agency. The same goes for our utility worker. Is it right that we both have the same rate? I’m confused. Don’t get me wrong, I’m not against our colleague but it’s just strange to have finished school and receive the same rate as them.

    Posted by Barbie Girl | September 17, 2014, 8:29 am
    • Hey Barbie! I like your alias. Hehe we’ll compensation depends on what was agreed by you and your employer. You can negotiate that during the hiring process. If you believe you are left out and your salary is not compensating the service that you perform and you are receiving less than you deserve, try negotiating with your employer or try finding a greener pasture. 🙂

      Posted by leecpa | September 17, 2014, 8:51 am
  10. Hi Sir .. ask ko lang po di ba sa Cavite (Dasmariñas) ang minimium wage is 328 .. pag nag increase po ba ito magiging taxable na po ba sila??

    Posted by lester | September 23, 2014, 9:22 am
    • Hi, you mean pag nag-increase ang minimum wage?

      Pag minimum wage ang nag-increase sa region, basta yung sweldo ng taxpayer eh not above minimum, exempt parin yan, provided walang other income or allowances and the like that would make it taxable.

      If you are referring naman po sa increase sa sahod ng employee from minimum to above minimum, definitely po eh taxable na yun. Example P328 yung minimum pero dahil nag-increase sweldo mo naging P330 eh taxable na lahat yung buong sweldo mo, except mga de minimis na tinatawag.

      Posted by leecpa | September 23, 2014, 9:32 am
  11. hello sir,

    binata po ako at walang anak, tanong ko lng po kung tama ung kinakaltas skin ng kumpanya, provincial rate po ko pero lagpas po sa minimum rate ng provincial, bale sumasahod po ako ng kulang 11k a month ksama n po dun ang allowance at O.T pay ko, tapos kinakaltasan ako ng kumpanya namin ng P800+ a month po un, tanung ko lng po kung tama ba ung kinakaltas sakin,

    Posted by robert | October 9, 2014, 2:22 pm
  12. Hi Sir, Tanong ko lang po kung tama po ba na kinakaltasan ako ng with holding tax, ang rate ko po ay 349.50 Cavite po. Bago plang po ako sa work ko and first job ko po ito. Kya im wondering kung tama nga po ba na may kaltas na ko? Thank youu po 🙂

    Posted by Jessie | December 4, 2014, 12:11 pm
  13. Hi sir, ask lang po ako. i am a minimum wage earner from Gensan. ang rate po ay 270 (masyadong mababa). with no other source of income ako. na ask ko sa finance namin about the no income tax pay for minimum wage earners. ang sagot nila, binabawasan daw kami monthly kasi wala ng bawas sa annual gross income. pwede daw walang tax every payroll, pero kaylangan siyang bayaran/bawasan pag end ng year. na confused po ako.. Tama po ba sila?

    Posted by Sunshine | December 13, 2014, 3:28 am
  14. Hi sir,
    I was a below minimum wage earner from january-july..so wala po akong tax , then by august i was given increase kaya nag above minimum na po ako kaya kinaltasan na po ako ng tax by august.
    Pero ang sabi po sakin ng payroll namin..na ung january-july eh need po lagyan ng tax para dun sa annual tax computation, so hinabol po nila un ng kaltas.
    Tama po ba yun?! 1st job ko po yun so naguguluhan pa po ako.
    Thanks.

    Posted by joy | December 27, 2014, 8:59 am
  15. Bakit po ngayong payroll slip ko for jan1-15, 2015 may withholding tax ako. Bagong empleyado pa lang po ako nagstart nung oct.2014 as a minimum wage earner, thank you

    Posted by mark | January 13, 2015, 10:51 am
    • Baka po tumaas na sahod nyo? 🙂

      Kung di naman po, eh may mga allowances kayo na taxable.

      May previous employer po ba kayo, at mas mataas sa minimum sahod nyo dun sa previous employer nyo?

      Oh di kaya, baka po nadeduct-an kayo dati ng withholding tax pero dapat hindi, kaya may refund kayo.. Di po kaya refund yan, instead of withholding tax?

      Posted by leecpa | January 13, 2015, 11:07 am
  16. Hello. I would like to ask if a Minimum Wage Earner can also be given De Minimis benefits in addition to the basic (minimum), the night differential, holiday pay, other bonus (from the statutory 82,000 annual) and still enjoy being a MWE. Thank you.

    Posted by Gigi | April 8, 2015, 11:42 am
  17. hello po. ang min. basic po kz dto ay 9074. may increase lng po s sahod po ng kaibigan ko kaya 9500 n po ang baisc nya. magkano po kaya ang mdededuct n withholding tax po nya?

    Posted by gara | April 13, 2015, 3:50 am
  18. Hello sir! Ask ko lang po kung dati po ba , kasama po talaga ung minimum wage earners sa taxation? Mga anong year po ‘yun at ano pong estado nun?

    Posted by Cherise Rosales | July 28, 2015, 4:04 am

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