Employers buck legislated wage hike

A group of employers warned lawmakers yesterday against passing a legislated wage increase, saying it would be "anti-development" and send businesses reeling from a "double whammy."

"It will be harmful to the economy, especially if the industry to be burdened by a wage increase has the potential capacity of generating revenues for the government, creating jobs and providing income for the labor force," Employers Confederation of the Philippines (ECOP) president Rene Soriano said.

Soriano issued this statement following pronouncements made by House Majority Leader Prospero Nograles that congressmen are set to prioritize the approval of a bill raising daily wages by "between P50 and P80" as sessions wind down in the next two weeks.

Soriano said the magnitude of this wage increase would accelerate the decimation of hundreds of thousands of micro-establishments and small and medium enterprises (SMEs) in the formal sector, and would run counter to the Arroyo administration’s goal of promoting and strengthening micro-enterprises and SMEs as key generators of employment and economic dynamism.

He said a national wage increase through legislation would be "anti-development" because it would fail to take into account prevailing economic conditions and other peculiarities in each region as well as other critical indicators like employment levels, inflation rates and productivity, among others.

Soriano noted that Republic Act 6727, otherwise known as the Wage Rationalization Act, was enacted in 1989 precisely for the various regional tripartite wage and productivity boards to set minimum wage rates applicable to regions, provinces or industries.

RA 6727 "sought to ensure an objective exercise of the wage-fixing function based on prescribed social and economic criteria," he said.

Soriano warned that congressional intervention in minimum wage-fixing would be a "double whammy" for businesses because this legislated wage hike would be on top of increases to be granted by the various wage boards and pay adjustments obtained through collective bargaining.

"It will be very destructive on an already fragile economy badly in need of investments and boosting consumers’ confidence," he said.

Meanwhile, the moderate labor group Trade Union Congress of the Philippines (TUCP) said the ECOP’s claim that a wage increase at this time would be anti-development is unrealistic, noting that workers need economic relief at a time when prices of basic goods and commodities have skyrocketed.

"It is unrealistic to say that we do not need a wage increase because prices have gone up due to the reformed value-added tax, and the threat of continuing increases in petroleum prices," TUCP spokesman Alex Aguilar said in an interview with reporters at the Department of Labor yesterday.

He believes that "employers, when they made a claim that a wage increase is anti-development, are probably thinking about a gamut of issues related to production. But wages comprise about 10 to 14 percent of the total production cost, which makes it a small part of their (capital)."

Aguilar said that the objective of employment is to provide workers with an opportunity to have a decent life, and suppressing wages "would be inconsistent with development, if people would be unable to afford their basic needs anymore because of insufficient wages."

The TUCP earlier led the filing of a P75 legislated wage increase before the regional wage boards in Manila and some provinces in the country.