8 business groups oppose legislated wage hike

MANILA, Philippines — Eight business groups have expressed concern over the Senate bills proposing a wage increase, raising caution that it may negatively impact micro, small and medium enterprises (MSMEs).

In a letter addressed to Sen. Jinggoy Estrada as chairman of the Senate committee on labor, employment and human resources, the business groups acknowledged the good intentions of authors of the wage hike bills, who cited how inflation has continued to erode the purchasing power of Filipinos.

“Raising wages may appear to be the easier and logical solution. However, only a small percentage of the total workforce – 16 percent or about eight million in the formal sector out of the 50 million in total number of Filipino workers – will be able to benefit from this proposal,” the business groups said.

Senate President Juan Miguel Zubiri and Senate President Pro-Tempore Loren Legarda are authors of Senate Bill 2002 that seeks to legislate a P150 increase in the daily minimum wage while Sen. Bong Revilla filed SB 2018.

“For even as there appears to be this short-term relief to a ‘happy’ few, we also should not ignore that the rising inflation has also negatively impacted businesses,” the business groups said, noting that 98 percent of these are MSMEs that have suffered the brunt of the pandemic and most of which may still be closed to this day.

The business groups noted that these MSMEs are also the employers of the same Filipinos whom these bills are aiming to help.

“If the proposal for increased wages is approved, these employers may have to further increase the prices of their products, reduce the number of their workers or simply close down.

Large firms which are capable of paying the wage increase only make up less than two percent of all Philippine companies,” the business groups said.

The signatories of the letter were Philippine Chamber of Commerce and Industry president George Barcelon; Employers Confederation of the Philippines chairman Edgardo Lacson; Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr.; Federation of Filipino-Chinese Chambers of Commerce and Industry president Cecilio Pedro; IT and Business Process Association of the Philippines president Jack Madrid; Philippine Hotel Owners Association president Arthur Lopez; Foreign Buyers Association of the Philippines president Robert Young and United Port Users Confederation of the Phils. Inc. president Nelson Mendoza.

Their group stressed that the Philippines already has the highest minimum wage among countries belonging to the 10-member Association of Southeast Asian Nations (ASEAN).

They said the prices of goods in the Philippines are higher than in other ASEAN economies and this may already be a direct effect of the higher minimum wages in the country.

In addition, this proposal will then become a sure threat against efforts to invite more investors when the CREATE and other investment-related laws are passed, the groups said.

”There is, however, an even grimmer scenario where a staggering 84 percent, who are workers in the informal sector, will see this as an ‘unhappy’ bill, as they are not expected to feel any gain because most of them work on their own with no employer,” the groups said.

This refers to around 42 million workers that include farmers, fishermen, market vendors, jeepney drivers, tricycle drivers and home-based small entrepreneurs that comprise the silent majority whose situation will worsen with the bill’s passage, as they have to pay higher for their purchases once businesses start to increase prices, the groups said.

They emphasized that the regional tripartite wage board’s mandate in this particular domain proves to be credible because of the regularity, mechanism and broad scope of consultations it conducts.

”For this reason, the business community feels more comfortable that they continue playing this role backed up by years of relevant and on-the-ground information,” they added.

As part of their recommendations, the groups said the Senate committee may also want to consider getting the assistance of agencies, especially those in the economic cluster such as the Departments of Trade and Industry and Labor and Employment and the National Economic and Development Authority, who can handle the pencil pushing.

”Needless to say, such an issue truly needs more time and accurate information to help ensure that efforts are truly responsive to the common good. Towards this end, we welcome the creation of the TWG (technical working group) where the informal sector and agencies mentioned above can also provide inputs,” the business groups said.