Regional wage boards to convene next week

By Samuel P. Medenilla, BusinessMirror, May 28, 2018

The surge in international oil prices and the implementation of the tax-reform law have prompted the Department of Labor and Employment (DOLE) to finally order the regional wage boards to determine the feasibility of hiking the minimum wage rate.

In a news briefing on Monday, National Wages and Productivity Commission (NWPC) Executive Director Criselda R. Sy said the DOLE will convene the Regional Tripartite Wages and Productivity Boards (RTWPB) in 10 regions on June 5 to determine if they could declare a “supervening condition” to exempt them from the one-year ban in issuing a new wage order.

The meeting will be attended by representatives from the Bangko Sentral ng Pilipinas, National Economic and Development Authority, Departments of Trade, Energy and of Agriculture, and the Land Transportation Franchising and Regulatory Board.

“If the commission will confirm their declaration [of a supervening event], a new order may be issued in the next 30 days,” Sy said. “The wage hike may be for a certain period only, like in the past. It will be based on their assessments.”

She clarified the declaration will be on “case-to-case basis” for each region.

Sy said factors that will determine the declaration of a supervening event include not only prices of basic goods and services, but also the implementation of the government’s “mitigating measures” to mitigate the impact of inflation.

These mitigating measures include the subsidy for jeepeney drivers, cash aid for the poor and the tariffication of rice import caps.

DOLE Undersecretary Ciriaco A. Lagunzad III said the RTWPBs have declared a supervening event four times: in 1991 during the Gulf War; in 2005 following the hike in value-added tax; and in 2008 and in 2011 because of the spike in oil and rice prices.

“In all those are actual conditions that were evaluated and these should translate to an extraordinary and sudden increase in inflation,” Lagunzad said.

Under Republic Act 6727, or the Wage Rationalization Act of 1989, the RTWPBs could only issue a new wage order a year after their previous wage order unless there is a supervening event.

A supervening event is any extraordinary increase in basic goods, such as petroleum, and services for a given period, which is usually for three straight months.

Fast-track consultations

Labor Secretary Silvestre H. Bello III also ordered the RTWPBs in six regions that are no longer covered by the one-year ban to fast-track consultations for hiking the minimum wage. These regions are Central Luzon, Western Visayas, Central Visayas, Eastern Visayas, Zamboanga Peninsula and Davao region.

“We are doing this to provide daily wage earners the capability to cushion the impact of spiraling prices, if not totally recover the lost value of their income,” Bello said.

Currently, the RTWPBs have already received new petitions to hike wages in Regions 6, 7 and 11.

Sy said the concerned RTWPBs “are currently in different stages of consultations and are well on their way to conducting their public hearings.”

“The instruction of the Secretary to them is to speed up their public hearings and to immediately issue their wage orders,” Sy said.

Faster inflation

DOLE considered proposals to raise minimum wage rates after the average inflation rate in April reached 4.5 percent. The figure is higher than the 4-percent inflation target of the government for the year.

“Usually when the inflation targets are breached, the boards [RTWPB] will start considering the possibility of declaring supervening conditions, but it has to be a sustained and sudden increase,” Lagunzad said.

Sy said they were advised by the BSP that the high prices of goods and services would persist longer than it has previously anticipated.

“Our [economic] experts previously projected that prices of basic commodities would peak by the second quarter and then stabilize by the third quarter. But recently they revised their outlook. They are now anticipating the prices to peak by the third quarter and normalize in the fourth quarter,” Sy said.

She said among the factors that contributed to the rise in inflation is the Tax Reform for Acceleration and Inclusion (TRAIN) law.

“As early as February, the Secretary has instructed all the boards to closely monitor the prices of basic commodities following the implementation of the TRAIN law,” Sy said.

But Lagunzad said only 25 percent of the inflation rate could be attributed to TRAIN. “Other factors which contributed to the rise of inflation are foreign exchange, trade deficit, and the debt-to-GDP ratio.”

Sy said the decline in the supply of affordable rice from the National Food Authority and the surge in international oil prices were also instrumental in the revision of the BSP’s inflation forecast.