Wage hikes may lead to layoffs, closures

Published by rudy Date posted on May 5, 2011

EMPLOYERS cannot afford to hike wages to as high as P75 daily, as proposed by some sectors, for it may lead to layoffs and closures of firms, according to the Employers Confederation of the Philippines (ECOP).

ECOP president Edgardo Lacson told reporters on the sidelines of the 32nd National Conference of Employers on Wednesday that the government’s plan to jack up workers’ wages by next month “doesn’t make us [employers] too happy.”

He said that if inflation would be taken into consideration, a wage increase of P13.35 or below a day in Metro Manila would be reasonable, although such a minimal raise would still hurt employers.

A higher wage hike would lead to layoffs or closure of businesses, Lacson warned, because of high costs not only of labor but also of other production inputs.

In a speech, he said that employers “now additionally face and feel the impact of the turbulent developments in North Africa and a number of Middle East countries, and, nearer to our shores, the calamity that recently hit Japan.”

“The uncertainty over oil supply issues has already pushed prices upward,” Lacson added.

According to him, these “and many other developments in the world,
especially credit defaults in Europe, are formidable external challenges which will certainly have an impact on our economy, our respective businesses and the employment of workers.”

“The volatile and temporary increases in the prices of fuel, transport and basic goods have prompted the wage authorities to declare a supervening event even as employers have manifested their reservations against such declaration,” the ECOP chief said.

Lacson added that while employers “do recognize and honor workers’ rights for decent jobs and wages,” they also “worry about the global threats against the financial health, stability and sustainability of our enterprises.”

“ECOP urges all stakeholders to continue the dialogue on many employment issues, wage in particular, and calmly sort out the emotional, economic and political conflict,” he said, adding that employers are amenable to giving temporary forms of relief through allowances and other benefits to help employees amid the hard times. –Ben Arnold O. De Vera, Reporter, Manila Times

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