Wage hikes to cut jobs — businessmen

by Richmond Mercurio (The Philippine Star), Jun 18, 2018

MANILA, Philippines — Raising wages further would lead to job losses, while suspending the Tax Reform for Acceleration and Inclusion (TRAIN) Law would not address inflation, said foreign business leaders.

“While wages, in conjunction with inflation and soaring commodity prices, have always been concerns that need to be addressed, but also here, a balance must be found, for if wages are to increase at the proposed rate, we will surely see losses of jobs, outflow of investments, reduction of export oriented firms, moving production and/or assembly to other, more competitive countries,” European Chamber of Commerce and Industry of the Philippines president Guenter Taus told The STAR.

Taus warned that raising wages would only put the Philippines at a serious disadvantage in comparison to its neighbors in the ASEAN region.

“In order to achieve the forecasted growth, or growth in general, we need to create jobs, not lose them,” he said.

American Chamber of Commerce of the Philippines senior advisor John Forbes said most of his group’s member firms are paying above minimum wage at present.

“However, if wages rise too much, inflation will worsen, jobs will be destroyed in local manufacturing, and more consumer goods will be imported. Unions might consider advocating reforms in rice policy to lower the price of the main staple of the Philippine diet, which is twice as high as Thailand and Vietnam,” he said.

Forbes said minimum wages should also continue to be set at the regional level through tripartite consultation, instead of having a proposed national minimum wage rate.

The Trade Union Congress of the Philippines, the country’s largest labor group, last week sought a P320 across-the-board increase in the daily take-home pay of workers in Metro Manila to help them cope with the rising prices of basic commodities and services which has been widely blamed to the implementation of the TRAIN law.

Inflation, or the rate of increase in consumer prices, hit a fresh five-year high of 4.6 percent in May, according to the Bangko Sentral ng Pilipinas.

In line with the soaring prices of commodities, petitions have already been made to suspend or stop the implementation of the TRAIN law which took effect on January 1.

“The increased excise taxes are not the primary cause of inflation. AmCham supported and continues to support TRAIN 1, except for some of the sugar tax and the removal of the preferential tax rate for skilled ROHQ employees,” Forbes said.

For his part, Taus said stopping the TRAIN law now is a “darn if you do, darn if you don’t” situation.

“We have been saying all along that certain portions of the TRAIN law are very important and valuable to economic growth, while other portions are certainly business deterrents. While the TRAIN law will surely not address immediate and/or current issues we have, such as weakening peso, or soaring commodity prices, but it will surely lay a more solid foundation for the economy moving forward,” Taus said.