Wage hikes in PHL not breached P27 in 22 yrs

MANILA, Philippines – Even if some sectors believe that the P125 minimum-wage hike is “justifiable,” the National Statistical Coordination Board (NSCB) said wage hikes in the Philippines have not breached the P27 mark in more than two decades.

In a text message, NSCB secretary-general Romulo Virola told the BusinessMirror that the highest minimum wage granted in the Philippines was P26.50 in November 2000.

This, Virola said, increased wages in the National Capital Region (NCR) to P250 in November 2000 from P223.50 in October 1999. The wage hike took effect under Wage Order 8 issued on November 1, 2000.

“The highest minimum-wage increase from 1989 to 2011 was P26.5 in the NCR as per Wage Order 8 dated November 1, 2000,” Virola said.

The P125-across-the-board minimum-wage increase that some sectors are asking have recently been touted as inflationary and could lead to layoffs since employers will spend billions if the increase is granted.

In the NCR Ibon Foundation Inc. said employers would spend P61 billion and reduce their profits by 17.3 percent. The increase will mean an additional P3,802 per month per employee.

An economist from the University of Asia and the Pacific, Victor Abola, said whenever a wage increase is set, there is a definite increase in inflation, as well as an increase in unemployment.

Abola explained that for every 10-percent increase in minimum wage, inflation, would increase by 0.3 percent.

In the case of nonagriculture work in the NCR, which has a minimum wage of P404, the P125 increase is almost a 30.94-percent increase in wages. This means there could be an increase of 0.9 percent in inflation.

“The inflation effect is around 0.3 percent for every 10-percent increase in minimum wage. The unemployment effect is also large. The higher the minimum wage, the higher the unemployment rate on a regional area basis,” Abola earlier explained.

In an earlier statement, Ibon said the economy has more than enough profits to support workers’ call for a P125 wage increase. Ibon cited data from the 2008 Annual Survey of Philippine Business and Industry of the National Statistics Office that establishments in the country with total employment of 20 and over had combined profits of P895.2 billion.

Ibon said the country’s Top 1,000 corporations in the country had a combined annual net income increase to P756 billion in 2009 from P116.4 billion in 2001. During this period, the Top 1,000 corporations had cumulative net incomes worth P3.789 trillion.

The total cost of the proposed wage hike will only be P135.6 billion, which, subtracted from total profits, will still leave establishments with P759.6 billion in profits. This is only a 15.1-percent cut in their profits.

With a P125 wage hike in the NCR, employers see their combined profit to shrink to P291.1 billion from P352.1 billion. The average profit per establishment in the NCR will fall by P6.8 million and still leave them with an average of P32.2 million in profits each. –Cai U. Ordinario, Business Mirror