Employers are open to the proposed review of the country’s minimum wage rate citing compelling reasons, but cautioned against creating “false expectations” on the part of the ordinary workers.
In response to the statement of the Department of Labor and Employment calling for a review of the minimum wage, Sergio Ortiz-Luis, Jr., president of the Employers Confederation of the Philippines (ECOP), acknowledged there are compelling reasons to review the current minimum rate. The wage rate varies per region. In Metro Manila, the daily minimum salary rate is P537.
“No problem with us to discuss as long this will go through the process at the Wage Boards where the employers are represented,” said Ortiz-Luis adding “We get all inputs and we will respect the outcome, but I caution do not raise false expectations.”
By false expectations, Ortiz-Luiz explained, there are 44 million employment market in the country but only 16 percent of that is formal market and the huge 84 percent is informal like the farmers, tricycle and jeepney drivers and market vendors who are not unionized or registered with DOLE or the self employed. Of the 16 percent, only roughly 10 percent are receiving daily minimum wage.
The big companies, which are already paying their employees more than the daily wage rate, will have no choice but raise their prices and eventually retail prices of goods will go up.
By raising the daily minimum wage, Ortiz-Luis said this will create wage distortions because only the 16 percent or 10 percent would be benefitted but the 84 percent will suffer more.
The second reality, Ortiz-Luis said is that Philippine enterprises are 90 percent micro industries and they generate 65 percent of total employment. The medium enterprises only contribute one percent of employment and the large with a little less than one percent.
During this pandemic, he said, half of the micro enterprises have already closed shop. “How can they reopen if salary rates are raised,” he noted.
With that, ECOP has proposed to prioritize the implementation of government subsidies to the 84 percent informal workers. Ortiz-Luis also noted that the government is already trying to implement the “ayuda” to the public transport sector and the marginalized.
“The large enterprises do not need help,” he said.
Ortiz-Luis also said would like to correct what he called misconception of equating the minimum wage to the living wage as many would say that the daily minimum salary cannot support a family of four.
He explained though that minimum wage is actually an entry level wage. Wha should be pursued instead is the improvement of the living wage, which is the additional benefits to a household like other members also contributing to the household income, free facilities from the government, and free health benefits, among others that government provides.
In this time of economic hardship, he said the labor sector is also cognizant of the situation that is why the big labor groups such as the Trade Union Congress of the Philippines have not yet filed a petition for increase in the daily minimum wage.
The situation is “very very fluid” in light of the rising oil prices and the Ukraine-Russia war although he also noted of a drop in oil prices because the oil producers from the Middle East are producing more.
The noise for hike in the minimum wage, Ortiz-Luis said was also compounded by politicians running in the upcoming elections and are mouthing the populist campaign for wage increases.
“This is election time and all candidates are calling for higher wage rates, but they are not the ones paying for that,” he concluded.
Meantime, ECOP Chairman Edgardo G. Lacson said that the results of the review must not translate into knee jerk reaction leading to automatic upward adjustments.
"Many economic factors must be seriously considered like the financial health of enterprises after two years of harsh economic lockdown that shuttered hundreds of thousands of enterprises and million of laid off workers," Lacson said.
"The minimum wage issue is a complex economic, political and social issue that DOLE must carefully and equitably study before implementing a quick fix solution to avoid harmful unintended consequences."