Government shelves P125 wage-hike proposal for workers

by Catherine Pillas, BusinessMirror, October 12, 2016

The Department of Labor and Employment (DOLE), backing down on the position taken by the country’s economic managers, has scrapped the proposal for a P125 across-the-board wage increase.

In a chance interview with reporters on Wednesday, National Economic and Development Authority (Neda) Director General Ernesto M. Pernia said the DOLE has expressed its agreement not to push through with the proposed wage hike earlier floated by DOLE Undersecretary Joel Maglunsod.

“…That’s not going to pass. We already talked to [Labor] Secretary [Silvestre H.] Bello [III] and he agreed with our position,” Pernia told reporters at the sidelines of the Philippine Chamber of Commerce and Industry’s (PCCI) Philippine Business Conference and Expo at the Mariott Hotel.

In an earlier story this week by the BusinessMirror, it was reported that economic managers have banded together to oppose the P125 across-the-board wage hike, citing the additional P166 billion yearly cost employers will bear if this is implemented.

Talks for a general wage hike arose when newly appointed Undersecretary Maglunsod, known for his ties with a militant labor group, issued a comment that the DOLE has instructed the Regional Tripartite Wages and Productivity Boards to start discussions for the grant of a general wage increase.

Later on, the DOLE clarified that the wage-hike announcement was not a policy proposal by the labor undersecretary, but rather a “personal concern.” Employers Confederation of the Philippines (Ecop) President Donald Dee, in an interview on Wednesday, said it was “an off-the-cuff remark” expressed by the neophyte undersecretary.

“They [economic managers] understood our position.… How could they think of implementing [a wage hike], if businesses [in the formal sector] will incur additional costs of P1 million a day for the 7 million workers?” Dee said.

The ECOP official said that those not covered by the across-the-board wage hike, essentially businesses in the informal economy (unincorporated household businesses, sari-sari store businesses, etc ) will be disadvantaged as they will also be affected by the attendant inflation, but without additional income.

“Paano naman ’yung nasa informal sector? Titiisin na lang ba nila ’yung inflation (How about those in the informal sector? How could they survive the backlash of inflation),” Dee asked.

Aside from the additional costs, ECOP also said that economic slowdown will be a likely consequence if the salary hike be implemented.

99 percent of businesses in formal sector are comprised of micro and small businesses, or enterprises employing less than ten and a hundred workers respectively, and with an asset size of less than P 15 million.

Any changes in the cost of labor could affect both the decision of workers to enter the labor market, and that of the business; Jointly, these can impact commodity prices and eventually economic growth, the group warned.

“This could also result into unemployment loss of thousands, and bring full-year unemployment rate to 7.3 percent in 2017,” ECOP’s position paper read.