Living wage

The Senate has begun hearings to increase the Philippine minimum wage. I have been listening to the debate on this issue and the arguments against an increase have remained the same for the past several decades. A major argument, especially by certain sectors of the business community, is that increasing the minimum wage will make the Philippines less competitive in attracting foreign investments. I am surprised that this particular argument is still being used until today. This is obviously a non sequitur argument.

Even in Asia, countries that provide higher wages for their employees have attracted more investments. It is good that Senate President Miguel Zubiri has pointed out that the minimum wage in Indonesia is more than P800 a day compared to the P570 minimum wage in the Philippines. In spite of this, Indonesia is a more attractive investment destination than the Philippines.

This is a heartbreaking story when it was not too long ago that the Filipino worker was paid higher than the Indonesian worker. Even now, the GDP per capita or per person of countries that used to lag behind the Philippines like Vietnam and Indonesia are now higher than this country. We have again become the “sick man of Asia” in spite of our substandard minimum wage, which supposedly is meant to attract investments.

Again, countries like China, Thailand, Vietnam and Indonesia with higher wages are considered more attractive to foreign investors. Another argument that is commonly used against the hike in minimum wage is that the Philippines has low labor productivity. One reason for this is that the best and most skilled laborers are forced to migrate to other countries. It is a known fact that overseas Filipino workers are considered highly skilled and hardworking.

Take, for example, the nursing profession, where the Filipino nurses are very much in demand in Europe, the Middle East and North America. In spite of the fact that there are thousands of nurses regularly graduating from our medical and nursing schools, the Philippines is confronted with the challenge of nursing shortages, especially in the rural areas.

A new argument I have heard against the increase of the minimum wage is that only 16 million will benefit from such an increase. The argument is that we should pay attention to the 34 million or so who would not benefit because they belong to the informal sector of the economy like farmers, fishermen, tricycle vendors, market vendors and so forth. This is another non sequitur argument.

It is true that the government must find ways to alleviate the harsh working conditions of the workers in the informal economic sector. However, this should not be used as an argument against increasing the minimum wage even if it will only benefit the 16 million or so workers.

Another argument for increasing the minimum wage is the fact that the continuous inflation averaging more than 6-7 percent continues to eat away at the unchanged minimum wage.

The ideal standard for a minimum wage is the Family Living Wage. According to the Global Living Wage Coalition, living wage is the renumeration received for a standard work week by a worker sufficient to afford a decent standard of living for the worker and his or her family. The elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing and other essential needs, including provision for unexpected events.

According to the Ibon Foundation, the living wage is the minimum income that a family of five in Metro Manila needs to live through each day.

A family of five in the National Capital Region should receive a wage of P1,160 a day or P25,226 a month to live decently. This is double the present minimum wage. While this may sound very high for certain sectors of the business community, it may seem even inadequate if we break down the major monthly budgetary needs as calculated by Ibon Foundation: P13,199 for food; P4,482 for housing; P2,614 for utilities; P1,718 for miscellaneous goods; P1,429 for transportation; PP496 for routine household expenses; P479 for communication; P467 for health expenses.

Personally, I find it hard to believe that the living wage as computed above can provide a decent standard of living for a family of five. I dare the opponents of increasing the minimum wage to the level of a living wage to try and live on food expenditures of P440 a day for a family of five. And yet, we are debating on whether we should increase the present minimum wage of P570 a day.

I hope that the lawmakers and businessmen will listen to their conscience and arrive at a minimum wage that will provide a minimum and decent standard of living for the Filipino family.

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