ECOP: Wage hike to push unemployed to 5 million

More dire warnings.

The Employers Confederation of the Philippines (ECOP) warned yesterday there will be massive retrenchment of workers once Congress approves a measure granting a P125 across-the-board wage hike.

ECOP president Rene Soriano said the country is already experiencing a phenomenon of jobless growth and added that the passage of the P125 legislated wage increase bill would only push the number of unemployed Filipinos up by over five million.

"The unemployment rate is projected to soar by 3.53 percent or 1.24 million to the current 3.8 million with the passage of the wage hike bill," Soriano said, citing data from the National Economic and Development Authority (NEDA).

He added that, based on NEDA data, the enactment of the wage bill could jack up the monthly inflation rate by 5.5 percent and result in a 3.85 percent drop in the gross domestic product (GDP).

According to Soriano, the passage of the wage hike bill will also accelerate the marginalization of the formal sector and the expansion of the informal sector and the so-called underground economy.

"The wage hike bill reflects the prevailing, highly populist orientation to continue increasing the benefits of salaried workers but completely disregards the stark realities of the Philippine labor market characterized by chronic unemployment and (an) expanding informal sector," he added.

Most employers still believe that any salary increase would be untimely but, since the different wage boards are already expected to give a wage hike, Soriano said such increases in salary should be productivity- and industry-based.

The National Wage and Productivity Commission (NWPC) echoed ECOP’s sentiments, saying Filipino workers would be far better off with lower minimum wage than with pay that, though higher, would still not help workers meet the rising cost of living.

In a position paper submitted before Congress last year, the NWPC said granting a P125 across-the-board daily wage hike could cause more suffering instead of alleviating poverty among workers.

NWPC executive director Ciriaco Lagunzad said that if the legislated wage hike is enacted into law, it would benefit only a small percentage of workers to the detriment of the larger number of informal workers and the general public.

There are 5.7 million wage earners in the private sector who would benefit from the P125 wage increase. The number of workers in the informal sector is much larger — 16.7 million — and they will not benefit from the legislated wage hike.

This means that a larger number of people will be disadvantaged even more because a legislated salary hike will contribute to increases in the prices of goods and services, Lagunzad said.

"In other words, while only about six million will benefit from this proposed wage increase, the rest of the 84 million population will suffer the consequences," he said.

Lagunzad also warned that a legislated wage increase will drive away direct foreign investments, considering that the minimum wage here would be much higher than the minimum wage in neighboring countries.

Acting Labor Secretary Manuel Imson said the different wage boards are deliberating on the salary hike proposal and are expected to come out with a decision within the next two weeks.

"The wage boards are following the timetable set by the President, so we are expecting their decision before the end of the month," Imson said in an interview.