ECOP sees high wage hike non-compliance by micro firms

Published May 17, 2022, 12:33 PM

by Bernie Cahiles-Magkilat

The Employers Confederation of the Philippines (ECOP) raised apprehension over potential higher non-compliance with the recently mandated minimum daily wage hike from the micro enterprises sector, although large enterprises are seen to easily follow the order.

Sergio Ortiz-Luis Jr., president of the Employers Confederation of the Philippines (ECOP), raised this scenario in light of the proposal by Presidential Adviser Joey Concepcion to exempt micro enterprises from the P33 daily minimum hike for Metro Manila workers and P55 for Western Visayas as this sector accounts for the majority of the country’s businesses and employment.

Ortiz-Luis pointed out that micro enterprises account for 90 percent of total Philippine business and they employ 65 percent of the country’s total workforce.

If micro enterprises are not exempted, Ortiz-Luis said they really cannot comply and would just completely shut down.

“What is important is we can generate or retain jobs,” he said adding that distressed firms are allowed to file for exemption. The Regional Tripartite Wages and Productivity Boards (RTWPBs) just have to be more flexible to the situation and make the filing of application for exemption easier otherwise these firms will not seek approval for their non-compliance.

“We need to identify who deserves the exemption, otherwise no one would be left,” he said.

The Department of Labor and Employment categorizes micro enterprises as those that employ 10 employees and below while the Department of Trade and Industry classifies micro establishments as those with capitalization of less than P3 million and below. The small firms are those with capitalization of P15 million and below.

He said distressed firms are those with 10 or less employees, particularly in the retail sector, may easily exempted, otherwise they will just close or not comply at all.

Ortiz-Luis also said that employers agreed with the P33 daily minimum wage hike for Metro Manila workers because it approximates their computation on wage erosion.

He said the P33, which would translate to P900 a month for each employee, is reasonable enough. Employers already shoulder other benefits including the Social Security System contribution among others for a total cost of P1300, a month.

But he also recognized that while large businesses can afford the recently mandated wage hike, the micro enterprises cannot really afford the additional financial burden.

“Even the small enterprises will have difficulty complying, how much more the micro enterprises as many of them are still recovering from the pandemic,” he said.

“Half of the micro and small firms closed their shops during the pandemic and many are still having difficulty reopening their operations,” he added.

Ortiz-Luis also addressed criticisms that some employers just resort to threatening of closing their shops even if they can afford to pay. To address this, he said the better way is to promote collective bargaining agreement at company level where employers, especially the big companies, grant salary increases even higher than the mandated wage rate, aside from their huge bonuses.

However, since most workers are not organized, the RTWPBs are the most ideal at the moment system in hearing salary hikes petition.

Ortiz-Luis also disagreed with calls to abolish the RTWPBs as he pointed out that leaving the wage setting to politicians would be difficult as politicians normally make unreasonable wage hike promises.

The long-time ECOP official further reiterated his explanation on the differences between a wage hike and living wage.

A minimum wage is supposedly an entry level rate for a new entrant, while a living wage is the sum of other sources of household income like a small store, a small piggery, and government benefits such as health, free education, among others.

“You cannot charge the company living wage because it cannot generate the living wage, but it is where the government should come in,” he said.