Employers are pointing out that only ten percent of the country’s roughly 50 million labor force will benefit from a legislated minimum wage hike, while a large majority of 90 percent will be further disadvantaged from such measure.
Sergio Ortiz-Luis Jr., president of the Employers Confederation of the Philippines (ECOP), emphasized this situation at the forum “Reinvigorating the Philippine Manufacturing Sector for Job Creation” organized by think tank Stratbase ADR.
Ortiz-Luis explained that only ten percent of the country’s 50 million workforce are formal wage earners, meaning those with employers. Of the ten percent, only two percent are large companies that can easily comply with a mandated minimum daily wage hike.
The large majority of 98 percent are micro, small and medium enterprises (MSMEs) of which only eight percent could possibly give their workers the mandated wage hike. This would leave behind the large majority of 90 percent, mostly informal workers with no employers, with no wage increase.
“These 90 percent are comprised of informal workers such as fisherfolk, farmers, public transport drivers, and the underemployed, all of whom are not going to benefit from the legislated wage hike,” he said.
As a result, the economic disparity between the formal and the informal workers are further widened with the mandated minimum wage increase.
Senate President Juan Miguel Zubiri has filed a bill seeking to raise the daily minimum salary rate in the National Capital Region by P150 to P720 from the current P570, approximately $10.14.
“No matter how well-intentioned, the potential repercussions of such a legislative proposal can bring us more problems. Since the wage hike is not productivity-based, companies will try to offset the higher payout by either raising prices or shedding workers,” he added.
He said the business community still prefers to have wage increase proposals tackled by the tripartite wage board where issues are carefully reviewed and all affected sectors and relevant government agencies are represented.
“We are concerned that in legislative wage hearings, the solons might not be getting the correct or complete information and the resource persons may not have complete representation,” he said.
While employers may be directly responsible for creating jobs, Ortiz-Luis pointed out that the whole-of-government approach to facilitate this to happen cannot be overemphasized.
He pointed out that business efficiency and productivity also rest on ensuring that the regulatory and policy environment is conducive. “There has to be a stable and predictable business environment by enforcing the rule of law, protecting intellectual property rights, and providing a level playing field for domestic and foreign investors,” he added.
Ortiz-Luis further warned that the recent good economic indicators, the growth agenda, and efforts of the President to attract foreign investments into the country might be dampened by the planned mandated wage hike.
“In two months, we will be hearing from President Marcos about the administration’s report card which should include the results of the joint government and private sector’s high profile campaign for more investments,” he added citing potential investments recycling facilities, alternative agriculture, such as sustainable farming, and renewable energy.
Also, he said the next Philippine Export Development Plan or PEDP 2023 to 2028 highlighted the importance of diversifying the country’s export basket by attracting investments in four clusters namely, industrial, manufacturing, and transport, technology, media, and telecommunications, and health and life science as identified by the DTI.
These are also among the high-growth clusters in the Labor and Employment Plan 2023 to 2028 that is being crafted among the tripartite partners of the government, employers and labor sectors.
Likewise, he took note of the 155 percent increase in approved projects of the Board of Investments (BoI), the country’s lead investment promotion agency. In the first quarter this year, BOI has approved P463.3 billion worth of investments.
“It is then relevant to mention the urgency of these investments to continuously and massively flow in to sustain the current performance,” he pointed out.
Complementing this performance is the country’s employment figures which increased to 48.8 million in February this year, 3.32 million higher than the 45.48 million employed persons reported in February 2022.
“These data suggests that the Philippine labor market is steadily recovering. But despite the higher performance of the labor market, challenges to improving the quality of employment across sectors still remain,” he said.
The private sector is pursuing the upskilling and retooling of workers on the supply side being part of its development agenda.
ECOP is likewise continuously working with the Department of Labor and Employment (DOLE) and the Technical Education and Skills Development Authority (TESDA) in upgrading skills particularly to meet the demands of digital transformation that is evolving globally.
The economic growth is also aided with amendments on Public Service, Retail Trade Liberalization and Foreign Investments Acts and the clarification made on the VAT zero rating application of the Corporate Recovery and Tax Incentives for Enterprises or CREATE law.