Retailers warn of job losses with legislated wage hike

MANILA, Philippines — The Philippine Retailers Association (PRA) has expressed concern over proposals for a legislated wage hike, noting that this may result in job losses in the retail industry.

In an interview with reporters, PRA president Bobby Claudio yesterday warned that a legislated minimum wage might just bring up labor problems in the industry.

“Because if you mandate by a law, you are forcing others who are not in a position to give additional wages or adjustments in their wages,” Claudio said.

“If you increase the minimum wage, more people will lose their jobs because most of the businesses, if they have to comply with higher wages, they will simply reduce employment,” he added.

The PRA official explained that mainstream retailers in the country have a workforce of about half a million people.

“Easily, 10 percent of that will be decimated. That’s 50,000,” he said.?He added that this would also impact the families of the affected workers.?

“One person working in the retail industry has, maybe, four or five family dependents. So we were saying before, around two to 2.5 million people are dependent on the retail industry,” Claudio said.

He explained that the job reduction numbers would be even bigger in micro, small and medium enterprises (MSMEs) in the retail sector, noting that this would result in an additional 300,000 to 500,000 loss of employment for the industry.

Asked for an alternative to the proposed legislated wage hike, Claudio cited labor unions, which most companies have.

“If you notice in the past, we have been able to survive and adjust our wages using our wage board and the collective bargaining agreement within unions. They are able to talk for adjustment,” he said.

In June, the National Wages and Productivity Commission approved a P40 increase in the minimum wage of private sector workers in Metro Manila.

The wage order is expected to directly benefit 1.1 million minimum-wage earners in the National Capital Region.

Businesses are already adjusting from the recently approved wage hike, according to Claudio.

“Anything more (than that) will definitely be answered by … instead of giving benefits or higher wages, to reduce people,” he said.

Business groups earlier expressed concern over Senate bills that propose a wage increase, raising caution that it may negatively impact MSMEs.

“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 Filipino workers in total – will be able to benefit from this proposal,” the business groups said in a letter in May addressed to Sen. Jinggoy Estrada, who chairs the Senate committee on labor, employment and human resources.

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 COVID-19 pandemic and most of which may still be closed.

The groups added 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,” they said earlier.

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.