DOLE wants wage adjustments done via regional boards, not by Congress

The Department of Labor and Employment finally broke its silence over a legislated wage increase but pushed instead for a wage adjustment through the Regional Tripartite Wage and Productivity Boards.

Labor Secretary Arturo Brion, while pointing out the dire impact of House Bill 345 to the country's economy, said DOLE shared the objective of Congress to raise worker's wages for them to cope with the rising cost of living but this is better done on a regional basis.

The regional wage boards are the better ways to address the wage issue, Brion said adding that the system of minimum wage determination strikes a balance between the needs of workers and the capacity of the employers and the economy to assume wage adjustments.

HB 345 providing for a P125 daily across-the-board wage increase, which the House approved recently, would only benefit a small portion of workers in the private sector to the detriment of the informal sector workers, the unemployed, and the general public, he said.

Brion said the legislated wage increase would lead to higher cost of goods and services, aside detrimental effect to vulnerable sectors. This would discourage also collective bargaining and unionism because there would be no reason anymore for a bargaining process, he said.

The wage increase under HB 345 will be given on a staggered basis, starting with P45 this year, P40 in the second year, and another P40 in the third and final year retroactive to October 1, 2006.

Across-the-board means that each of the 12.4 million salaried workers in private establishments, not only the minimum wage earners, will get the P125 increase on their wages, he said.

Brion, citing a recent study of the National Economic Development Authority, said this legislated wage hike would only be disastrous to both labor and management, as it would make worse the country's inflation, unemployment, and gross domestic product.

NEDA had placed the country's inflation rate at 4.7 percent, as of last November, while it put the GDP growth rate at 4.8 percent as of the third quarter last year.

With the impending P45 hike on wages, NEDA foresee a slowdown in GDP growth by 1.4 percentage points then, with next year's wage increase, another 1.4 percentage points fall in GDP and, with the third hike, a 0.9 percentage points drop in GDP.

"If (HB 345) eventually becomes a law, who could withstand this? Only the big companies. What will happen to the micro, small, and medium enterprises?" Brion said, referring to this sector that comprises about 99.6 percent of the total business establishments in the country.

The wage adjustment this year will also put at risk some 476,000 workers, then 361,000 more next year, and another 323,000 during the last round of increase in the third year, the NEDA added.

Brion explained that, aside from these indicators, a legislated wage increase will also result in higher add-on costs to employers, such as on the 13th-month pays, holidays, service incentive leaves, SSS and Pag-IBIG contributions, and health premiums.

This means that the add-on costs would translate to an additional P1.21 cash outlay from employers for every peso added to the worker's daily wage. The P45 wage increase this year therefore is actually a P54.45 increase, Brion said. - Wenna A. Berondo/RAE