Two electronics companies are pulling out their investments in the country and moving their operations to Vietnam as local labor costs continue to soar every year, an industry official said.
At a press conference, Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) board member and First Philec managing director Dan C. Lachica said Tokyo-based cordless phone giant Uniden and another company he refused to identify are abandoning local operations because of rising operating costs.
”We have to temper wage increases with realism. Now more companies are shutting down and moving to Vietnam,” Lachica explained.
According to Lachica, the legislated annual increase of minimum wage is a serious concern of all companies especially since the peso continues to appreciate against the dollar.
He proposed following the example of other neighboring countries wherein there is no minimum wage and no mandatory increase.
When asked if they will ask the Congress to amend the law requiring the mandatory increase of minimum wage, SEIPI chairman and PSi Technologies Inc., chairman and chief executive officer Arthur J. Young said no. “This is a controversial matter,” he said.
However, Young said they have discussed the matter with the National Competitiveness Council (NCC). The NCC is a collaboration of private and public sector working to make the Philippines an attractive investment site.
“Wage increases should be merit and productivity based. It should not be mandatory,” Young noted.
”The increase in minimum wage should not be an annual thing. In other countries they change their minimum wage every three to five years,” Ernesto Santiago, SEIPI executive director said.
In fact, another SEIPI board member and head of Maxim Philippines Operation GroupGeorge Rutland said it is difficult for their mother company to understand surprises in labor in the country.
”Our headquarters do not understand a country that surprises you with holidays and wage increases,” Rutland noted.