DOLE rejects calls for P125 wage hike

MANILA, Philippines - The Department of Labor and Employment (DOLE) yesterday ruled out the possibility of a P125 across-the-board increase in the daily take- home pay of workers nationwide because it could trigger displacement of over 300,000 workers.

“While the DOLE shares the view that there should be high and rising living standards for workers and their families, the DOLE cannot support the proposed across-the-board P125 daily wage increase because it will weigh down heavily on the economy through higher prices, loss of jobs, and slower overall economic growth,” Labor Secretary Rosalinda Baldoz said.

A proposed House bill providing for a P125 across-the-board increase in the salary rates of employees and workers is now pending before Congress.

Aside from causing massive displacement of workers, Baldoz said, the proposal could also scare away foreign investors who would surely shy away from a very high labor cost.

She said at this time the existing minimum wage rate in the country is already high compared to most countries in Asia.

Based on a study done by the National Wages and Productivity Commission (NWPC), the increase provided for under the proposed measure would translate to a daily additional effective labor cost of P156.49 per employee per day or P4,081.78 per month per employee, or P48,981.37 per year per employee, according to Baldoz.

“Taking into consideration the 15.7 million wage and salary workers employed in private establishments nationwide as of July 2011, an across-the-board P125 wage hike will translate to an additional labor cost of about P2.5 billion per day (P156.49 x 15.7 million wage and salary workers), or P64.2 billion per month, or P770.7 billion per year,” she explained.

She said such proposal, if implemented, would result in higher inflation rates that would only further erode workers’ incomes.

“The NEDA estimated that if wages were increased by P125 across-the-board in July 2011, inflation rates would have risen by 11.7 percentage points, effectively breaching the target inflation range of three to five percent,” she stressed, adding that the granting of P125 pay hike would displace 353,000 workers that could bring unemployment from 6.8-7.1 percent to 7.7 to eight percent.

She also noted that the combined effects of higher unemployment and higher inflation rates could invariably slow down GDP growth, weaken viability of micro, small and medium enterprises which comprise 99 percent of total establishments by forcing many of them to downscale, if not cease operations.

Wage hike is detrimental

The European Chamber of Commerce of the Philippines (ECCP) said an across-the-board wage hike would be detrimental to building economic competitiveness because it would affect the capacity of employers to absorb more people into their workforce.

“We believe that it is more important to employ people than overfeed those that already have a job,” ECCP executive president Henry Schumacher said during the launching of the 4th Call Center Olympics 2012.

The January 2012 Labor Force survey of the National Statistic Office showed that unemployment was highest in the National Capital Region (NCR) at 12.2 percent and lowest in Cagayan Valley at 2.4 percent.

More males are unemployed (63.5 percent) compared to females (36.5 percent). Almost half of the unemployed (49 percent) were aged 15 to 24.

Baguio employers want  voluntary wage hike

In Baguio, employers wanted voluntary wage hikes instead of mandatory increases.

In this week’s consultation convened by the Regional Tripartite Wages and Productivity Board (RTWPB), members of the Hotels and Restaurants Association of Baguio (HRAB) and the Baguio Association of Restaurants (BAR) believe that the Tier 2 wage system based on productivity incentive system approach is more doable.

HRAB president Moises Cating said the business sector acknowledges the plight of the labor sector but “business must not pay for the government’s inadequacy in regulating increase in the prices of goods.”

While the Tier 1 system approach is mandatory in the form of wage orders, Tier 2 is optional on the part of an employer.

BAR representative Lourdes Nang proposed a status quo, saying if a business is thriving, the management should increase the wages or even the allowances of their workers. 

The RTWPB in Baguio remains uncommitted in issuing another wage order, but based on the data presented by Department of Trade and Industry (DTI) Regional Director Carmelita Usman, the prices of basic and prime commodities have generally increased.

Usman said commodities such as sardines, milk, coffee, soap, bread which could be purchased for P100 in 2006 now requires an additional P25 to buy the same quantity of goods. – With Artemio Dumlao, Eva Visperas, Czeriza Valencia