Employers back productivity-based wage setting

Noting less restiveness of workers, employers are backing a proposal for a two-tiered wage scheme to do away with mandated yearly minimum wage increases.

“We may be eroding our advantage of having lower wages through our yearly minimum wage setting such that this discourages investments,” Edgardo Lacson, president of the Employers Confederation of the Philippines (ECOP), said. “We have high cost of production and we tell investors we have lower wages. That is our only advantage but we are eroding it.”

He said the Philippines should begin looking at a market-oriented minimum wage-setting process that does not distort salaries.

Lacson said this scheme would put an end to the highly-politicized wage-setting exercises yearly and would base salaries on productivity.

“Less government intervention, the better for workers,” he said.

Lacson said only a small portion of workers truly benefit from the yearly minimum wage-setting exercises of government.

The recent P18-hike benefited only 8 percent of total workforce since most workers are receiving beyond the minimum wage.

Lacson added that every time an increase in minimum wage is imposed, there is a noted migration to the informal sector. “Companies go underground.”’

Under a proposed two-tiered wage scheme, Lacson said a minimum national index as entry level or floor wage can be determined through legislation plus a variable component through productivity-based wage which will be set in cooperation with unions.

But according to Lacson, unions nowadays just wait for the increases because they happen yearly anyway.

Lacson said the National Statistics Office has noticed a decline in union membership and ECOP notes less restiveness among them.

“This is an offshoot of the global crisis when workers have become aligned with management in protecting jobs and in saving the company,” Lacson said.

He added that majority of companies now employ less than 10 employees.

So far, he said, the only major strike recorded this year was that of Goldilocks workers.

“Unions are still necessary because they are our partners in disciplining the ranks of workers, and we as management have just one group to talk to in the company,” Lacson said.

ECOP will sit down with stakeholders in a tripartite regional “Industrial Peace Council” where it will propose a review of the labor code and amend provisions on labor only contracting, rights to collective bargaining, less restrictions on unions, management prerogative and the like.

Lacson said this is the second attempt to shift wage setting since 1995.

“It may be hard to implement at first since we have to determine the productivity factors but it can be done. It’s being done in countries like Malaysia and Indonesia,” Lacson said.

The two-tiered wage system proposed by the Department of Labor and Employment is embodied in the resolution set to be issued by the National Wages and Productivity Commission. – Irma Isip, Malaya