Executive softens on across-the-board wage hike

by BusinessWorld, October 13, 2016

THE EXECUTIVE branch appears to be rethinking its push to replace the regional minimum wage system with one that sets a nationwide floor pay for the private sector, as Cabinet men said yesterday they agreed earlier this month to first consider concerns of affected sectors like micro, small- and medium-scale enterprises (MSMEs) that account for bulk of the country’s jobs and businesses.

Asked for updates on this plan and prospects for a P125 across-the-board legislated daily minimum wage hike — which the Employers’ Confederation of the Philippines estimated in a September position paper would cost MSMEs a total of P166 billion annually and big businesses “over P109 billion” as well as add 7.7 percentage points to the 2017 inflation rate targeted at 2-4% — Socioeconomic Planning Secretary Ernesto M. Pernia told reporters at the sidelines of the Philippine Chamber of Commerce and Industry’s (PCCI) annual summit in Manila Marriott Hotel: “Wala ‘yun, that’s not going to pass, because we already talked to (Labor) Secretary (Silvestre H.) Bello (III) and he agrees with our position.”

MSMEs — which the government estimates make up some 99.6% of businesses in the country and contribute more than 60% of total jobs — are expected to bear the brunt of the proposal, forcing them to either lay off workers or shutter altogether.

Asked in a telephone interview afterwards for details, Mr. Pernia said state economic managers, including Mr. Bello, discussed the issue “[d]uring a Cabinet meeting on… Oct. 3.”

“He is somebody we can convince,” Mr. Pernia said of Mr. Bello.

Mr. Bello issued a memorandum last Sept. 1 ordering Regional Tripartite Wages and Productivity Boards “to consult and generate consensus or comments on the anticipated filing of legislative measures proposing a P125 across-the-board increase in the wages of workers of the private sector in the 17th Congress.”

Later that same week, Department of Labor and Employment (DoLE) Undersecretary Joel B. Maglunsod said President Rodrigo R. Duterte himself wanted the regional minimum wage-setting system under Presidential Decree No. 442 of 1974 and Republic Act No. 6727, or the Wage Rationalization Act of 1989, supplanted by a national system similar to the one that had been in place under RA 602, or the Minimum Wage Law that was enacted in 1951.

Sought for comment yesterday, Mr. Bello clarified that there is “[n]o decision for us to consider the P125 across-the-board wage hike that will need legislation.”

“We are still studying the viability of the proposal,” Mr. Bello said in a telephone interview, stressing that the “status quo” remains for now. “We need to consult all stakeholders, such as business management groups, employee groups, PCCI, Chamber of Commerce, all of them.”

Mr. Pernia noted that “it was (Mr.) Maglunsod’s proposal to increase the wages.”

Asked for developments, Mr. Maglunsod — who was appointed to DoLE at the start of the Duterte administration in end-June from the left-wing Kilusang Mayo Uno — said separately by phone that the department was “still studying… the 125 wage increase,” arguing that “current wages are not enough for the families here in Metro Manila and the effect on business groups will not be that huge.” — Jumaine Christene V. Doctolero