Employers buck wage hike, offer allowances

Published by rudy Date posted on May 5, 2011

STIPENDS instead of outright pay increases should be considered by wage boards as current economic conditions could soon improve, the head of an employers’ group yesterday said.

“Let us not apply a permanent solution to a very temporary problem because the pricing problem now is volatile and temporary, it can improve in a few months’ time,” said Edgardo G. Lacson, president of the Employers’ Confederation of the Philippines (ECoP) at the sidelines of the organization’s annual conference.

His comments came as central bank Deputy Governor Diwa C. Guinigundo reiterated warnings against substantial increases, saying “a further rate adjustment may be considered” if minimum wages are adjusted by more than P25 per day.

The Monetary Board meets today to discuss policy and analysts expect a follow-up to last month’s 25-basis-point rate hike given rising inflation and looming wage hikes.

Mr. Lacson said the ECoP would be submitting a position paper to the Metro Manila wage board tomorrow, the last day for filing proposals before a May 9 deliberation on the Trade Union Congress of the Philippines’ (TUCP) petition for a P75 increase.

He said the grant of subsidies and allowances for clothing, transportation, food and medicine would be a “realistic” compromise as these can be withdrawn when the economic situation gets better.

Employers are also considering the Federation of Filipino-Chinese Chamber of Commerce and Industry, Inc.’s proposal of a P13.35 adjustment but even this will result to job losses, Mr. Lacson claimed.

He argued that there was “no supervening event” justifying an immediate wage hike, noting that the wage board’s declaring “extraordinary” fuel price increases as a catalyst should have also been the argument in 2008 when global crude prices hit record highs.

“We have to reconcile [the] definition of a supervening event,” he said.

Labor Secretary Rosalinda D. Baldoz, who spoke at yesterday’s ECoP conference, said the Metro Manila wage board would “surely consider the temporary nature of the supervening condition in adjusting wages.”

Sought for comment, TUCP Chairman Ernesto T. Herrera said his group would welcome an allowance “so long as it will be on top of the wage increase.”

University of the Philippines economist Benjamin E. Diokno, for his part, said he was in favor of “temporary, voluntary and non-binding” forms of assistance.

“The advantage to employers is that these benefits won’t translate into additional contribution to SSS (Social Security Service), Pag-ibig (Home Development Mutual Fund), PhilHealth (Philippine Health Insurance) and long-term cost in terms of separation and retirement benefits,” Mr. Diokno said.

“The wage boards should resist the pressure to increase minimum wages. The mild inflation rates do not justify it.”

Emergency cost of living allowances were ordered by the Metro Manila wage board in 2001 (P30/day) and 2004 (P20/day) but were later integrated into the minimum wage in 2007 along with a P12/day pay hike.

Direct wage adjustments in the National Capital Region have not gone higher than 2000’s P26.50/day. Last year’s increase of P22 raised daily minimum wages in the metropolis to a range of P367-404. — from reports by N. M. Gonzales and A. S. O. Alegado, Businessworld

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