While “we all want to improve the lives of our employees,” Go Negosyo founder Joey Concepcion asserted on Wednesday, Feb. 28, that the right way forward is to create jobs, which is the more sustainable approach to growing the economy.

Joey Concepcion (Photo from Go Negosyo)

In a statement, the Private Sector Advisory Council Jobs Lead said that not all companies can afford to hike its employees’ wages and that doing so might be more detrimental to the economy.

“We all want to improve the lives of our employees, but what is important is for the economy to continue to grow,” he stressed, adding that more jobs will be created when the economy grows and thus, higher wages for the workers will also come.

Concepcion explained that such a thing is happening in “sectors where we lack a supply of workers.

“An example of that is our nurses; they are paid well because the demand for nurses is high,” he said.

Another way to raise the wages indirectly is by upskilling and reskilling workers because this will make the Philippine workforce competitive with its Southeast Asian neighbors.

A highly skilled workforce that can attract foreign direct investments will boost economic growth, he explained, which in turn can generate more jobs and increase wages.

Increasing salaries this way is more sustainable because boosting the people’s spending power on the scale and speed being proposed by legislators will hurt smaller companies, Concepcion added.

“Using wage increases to spur the economy is a tricky situation. Eventually smaller companies cannot survive and they will close shop. Rather than having people with jobs, you will have people with no jobs.”

His remarks came amid the proposals by members of the House of Representatives to raise the minimum wage by P350 daily, even higher than the P100 wage hike approved by the Senate.

“They have to be careful with the P350 wage hike. Nobody in history has done that, and that will shake down a lot of companies,” he said.

“Business is not against giving wage increases but we have to be careful when we do it, and how we do it, especially considering our MSMEs comprise 99 percent of enterprises and generate more than half the jobs here. They cannot afford the wage increase because they are survival entrepreneurs,” he added.

Instead, Concepcion asked that minimum wage hikes must be for the regional wage boards to decide on.

He explained that the Regional Tripartite Wages and Productivity Boards (RTWPBs) are tasked to review and adjust minimum wages based on several factors, such as inflation, cost of living, and economic conditions in their respective regions.

It is only when the wage adjustments are deemed necessary beyond the regional level can legislation be passed by Congress and signed into law by the President.

The last legislated wage hike in the Philippines was in 1989 with the enactment of Republic Act 6727 or the Wage Rationalization Act, which effectively declared that wages would be set on a regional basis by the regional wage boards.