Study: Metro Manila wages not keeping up with inflation

MANILA, Philippines — The daily minimum wage in Metro Manila has not kept up with the rate of inflation or even the productivity of Filipino workers, according to IBON Foundation.

As the Regional Tripartite Wages and Productivity Board in the capital deliberates on a possible wage hike next month, the research and advocacy group argued that the real value of the daily minimum wage has fallen since its peak under the Aquino III administration.

This as inflation has eroded the real value of wages especially for minimum wage earners.

IBON said Metro Manila minimum wage hit its highest value in June 2016 when the P491 nominal minimum wage was worth P538 in real terms, measured at 2018 constant prices to take away the effects of inflation.

But as of May 2024, the P610 nominal wage is worth just P501 in real terms or seven percent below its peak eight years ago.

IBON maintained that Filipino workers urgently need a substantial wage hike toward a family living wage.

“Workers and their families struggle with poverty wages and need an immediate large wage increase to bring immediate relief from the rising cost of goods and services,” IBON said.

For instance, data showed that the P610 minimum wage is only half of the P1,197 needed for a family of five.

For a five-day work week, the minimum wage translates to P14,373 per month, 8.5 percent below the P15,587 poverty line for a family of five.

IBON noted that a meaningful wage increase is needed to correct how wages have lagged behind worker productivity for at least two decades, creating huge profits for employers.

From 2000 to 2023, worker productivity jumped by 62 percent but the minimum wage by nine percent only, both measured in real terms and adjusting for inflation.

“This shows that Filipino workers are not fairly compensated and employers disproportionately pocket growing worker productivity as profits,” IBON said.

The advocacy group also argued that Metro Manila establishments have more than enough profits to give a significant wage hike as compensation only accounts for 14 percent of average expenses across NCR businesses.

Assuming that one-half of the employed are at minimum wage or below, IBON computed that a P150 minimum wage hike is equivalent to just four percent of their profits.

“Employers can give this tiny share of profits to workers without raising prices, causing inflation and undertaking layoffs,” it said.

Last week, the Department of Labor and Employment said minimum wage earners in the capital are likely to get an increase in their daily take-home by mid-July.