The call for wage hike

BIZLINKS - Rey Gamboa - The Philippine Star

Faced with fresh calls to increase minimum wages, the government must once again explain the rationale behind the current two-tiered wage system (2TWS), but more importantly, seek the private sector’s cooperation in mollifying our daily wage earners who have been most hurt by the recent stubbornly high inflation rates, especially on food.

Businesses may have been badly hit by the economic stoppage during the pandemic lockdowns in 2020, but the economic reopening in 2021 – despite global supply chain problems – has already allowed most of them to recover, or at least be on the path to recovery.

The prolonged higher cost of living during the last 12 months has taken a harsher toll on our workers and this has eaten up the salaries of all wage earners whose savings had already been depleted during the pandemic lockdowns.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan has been voicing out the government’s view on the dangers of raising minimum wages at this time, and has suggested the long-about way for lawmakers to work on ways to increase demand for labor.

While theoretically correct, it does not recognize the urgency of the situation where our workers are paying more for transportation and food, the latter of which can only be blamed on government’s ineptness by allowing food shortages.

The still high cost of imported fuels is something that the government has no control of, the country being highly reliant on fluctuations in global crude prices. Fortunately, there has been an overall downward trend during the last few months, perhaps a sign that the turbulence caused by the world economy’s reopening and the Russian invasion of Ukraine is abating.

Ineptness or manipulation?

Past and ongoing wide-scale shortages of several food commodities, however, reflect the government’s shortsightedness in anticipating the impact on food prices, and consequently, on inflation. Whether such shortages are caused by manipulators after a quick buck or poor oversight by those responsible in government, the whole shebang that caused the skyrocketing prices of sugar, onions, fish, salt, and other basic commodities should have been better managed.

A tighter grip on the availability of food products throughout the country, especially those that have to be imported to augment local production, should be a priority concern by government, especially acute shortages directly affect the consuming public.

The case of sugar is a clear example of how the failure of government to facilitate its importation to augment the needs of local manufacturers was taken advantaged of by traders who saw a chance to earn from doubly high prices.

Government must have an ironclad hold on the flow of consumer goods within the country, especially those that we don’t have enough of. Failure to do so will undoubtedly lead to a demand for higher wages, which could lead to chaos if not properly handled.

Two-tiered wage system

The Department of Labor and Employment (DOLE), through the National Wages and Productivity Commission (NWPC), currently manages a two-tiered wage system (2TWS) since 2012 that provides a reasonable basis for determining the minimum wage that workers should get and how a worker can rise beyond and above the set minimum wage.

Tier 1 uses a wide range of inputs, such as the poverty threshold, prevailing wage rates, as determined by the Labor Force Survey, and socio-economic indicators such as inflation, employment figures, gross regional domestic product, and many others, as basis for determining the minimum wage.

For Metro Manila, where a big portion of the working population earn their living and where the standard of living is highest, DOLE had adjusted the minimum wage to P570 a day in June last year from P537 a day from the previous year.

The basis for the adjustment, according to the NWPC, was to mitigate for the higher cost of goods and services needed by a Filipino family to live above the poverty line.

It is worth noting that adjustments in the minimum wage were reflected in other regions, although the rates varied depending on the local conditions. Other facts to consider include the increase in minimum wages for Metro Manila to P537 in 2018 from P512; and that the minimum daily wage in 2013, or a decade ago was only at P466.

Wage increases, while beneficial to our workers, also had a downside in that the Philippines quickly earned a reputation for having a higher labor cost than other countries like Thailand, Indonesia, and Vietnam. Consequently, the Philippines was bypassed by many investors.

Extraordinary times

Unfortunately, we are a country still very much reliant on investments by foreign companies, and our higher labor cost is a big reason for their decision not to come over, even if the minimum wage system that was adopted a decade ago has helped quiet down what otherwise could have been an out-of-control militant labor sector.

The NWPC, together with its regional counterparts, will just need to show how its decisions balance out the interest of the whole country. The DOLE, however, must recognize that in extraordinary times when high inflation lingers because of many external factors, the private sector must step up.

Some companies have come up with temporary measures to help their employees, using the reported monthly inflation rates collated by the Philippine Statistics Office as basis for extending any form of help.

Labor and management must co-exist on transparent and harmonious terms that ensure a win-win relationship. Let’s not squeeze capital to death by high wages, but let’s give more attention to our workers’ welfare so that they may live with dignity.

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We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

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