Making sense of wage hikes

Informal sector workers such as small-scale fishermen are not covered by minimum wage hikes.  PHOTO BY MARIT STINUS-CABUGON

Informal sector workers such as small-scale fishermen are not covered by minimum wage hikes. PHOTO BY MARIT STINUS-CABUGON

THE minimum wage hikes approved by the country’s Regional Tripartite Wage and Productivity Boards (RTWPB) look like the Duterte administration’s “departure gift” to the labor sector. The last minimum wage hikes came about in 2019 and, considering the recent price increases, making ends meet on prevailing minimum wages is definitely a tall order. There is no question that the real wage of minimum wage earners has eroded significantly since the last wage order. However, minimum wages are determined not only on the basis of inflation.

After all, employers are as much victims of inflation — reflected as rising costs of production — as employees. Higher wages not resulting from or leading to higher productivity likely means that employers have to increase the prices of their services and products — which means higher inflation — and if that isn’t feasible, retrench, reduce hours of work, find other cost-cutting measures or close shop.

Why the thought that the increases are “gifts” from the outgoing administration? Usually, the government representatives in the regional wage boards, especially the representative from the Department of Trade and Industry, side with management. This time, however, the increases, while below the usual unrealistic if not bizarre demands by labor organizations, appear to be substantially higher than what the management found acceptable. Of course, employers will always insist that they can’t afford to increase wages. However, after two years of the pandemic, it is obvious that the private sector has suffered immensely; many businesses have closed temporarily or permanently while others continue to operate under reduced capacity. The price increases resulting directly and indirectly from Russian President Vladimir Putin’s invasion of Ukraine has made recovery even harder. The odds just got worse for the business sector.

It may be argued that the more money employees have to spend, the more business will strive. In fact, in countries where wages are high relative to cost of living, the local economy is not dependent on foreign tourists and returning OFWs. But individual, struggling establishments can hardly wait for the entire economy to get a boost.

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Take establishments with 10 or less employees in Western Visayas. The RTWPB passed a whopping P110 wage increase, thus increasing the daily wage from P310 to P420. That’s 35 percent additional pay. The increases for agricultural workers and establishments with more than 10 employees are 30 percent and 14 percent, respectively. Add corresponding increases in mandatory employers’ contributions to PhilHealth and SSS plus the 13th month pay. The Western Visayas business sector is up in arms against the wage order.

The April 2022 Labor Force Survey shows that 62.8 percent of all employed Filipinos are wage and salary workers, or formal sector employees. How many of these approximately 28.7 million individuals are actually receiving not less than the minimum? How many are receiving more?

What about the remaining 37.2 percent of employed Filipinos? Of that number, 27.6 percent, or 12.6 million, are self-employed and 7.1 percent (3.2 million) are unpaid family workers. These two classes of employment, comprising a third of total employed Filipinos in April 2022, make up what the International Labor Organization (ILO) calls “vulnerable employment.” They constitute the informal sector and are not covered by minimum wages, working condition standards and social protection. The ILO believes in the necessity of a “transition to the formal economy as a means for realizing decent work for all and for achieving inclusive development” (ILO Recommendation 204, 2015). Informal sector workers too are affected by rising prices but are often not in a position to charge more for their services and goods.

While unemployment declined in April, the Social Weather Stations reported that hunger rose during the same period, with an estimated 3.1 million Filipino families experiencing hunger. Will the wage hikes bring relief or more misery? The wage increases are more likely than not to result in retrenchment and businesses postponing hiring, at least in the short term.

Cebu news forum launched

Cebu has a new weekly news forum. OpenLine News Forum was launched last June 8 with incoming Cebu City district representatives Cutie del Mar and Edu Rama, first and second district, respectively, sharing their legislative plans. A particular “hot” question was whether they would support the resumption of e-sabong. Cutie del Mar was categorical: No to e-sabong. “E-sabong is like poison,” she said. Outgoing Cebu City councilor Edu Rama, for his part, admitted that the Cebu City council had been ignorant, if not naïve, in approving e-sabong operations. “We thought it was a help to the game fowl industry,” he said.

E-sabong served as a generous source of election funds for some candidates, if we are to believe the grapevine. Maybe this explains why Malacañang only moved to stop it a few days before the elections, despite early and indisputable evidence of the social, economic and moral destruction that it was wreaking.

OpenLine News Forum is held on Tuesday mornings from 9 to 11 am. Aired live on MyTV’s Facebook page, YouTube channel and website the forum is hosted by Erik Espina and Andrea Pateña-Matheu.

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