THE NATIONAL Capital Region (NCR) has kicked off a fresh round of raise for private sector minimum wage earners nationwide, with those in Metro Manila getting P15 more starting next month on top of current pay, the Department of Labor and Employment (DoLE) announced yesterday.
Business leaders yesterday were cautious towards the development, citing the need to preserve whatever edge the country still has over its peers in attracting investors, while a spokesman of the country’s biggest labor group described the approved amount as “revolting” as it widens the gap between the rich and the poor.
And while the country’s capital typically leads other regions in raising daily minimum wage, a ranking central bank official said the latest round should not stoke inflation beyond expectations and, hence, will not in itself warrant a change in monetary policy.
A DoLE statement yesterday said Alex V. Avila, chairman of NCR’s Regional Tripartite Wages and Productivity Board (RTWPB), had reported to Labor and Employment Secretary Rosalinda D. Baldoz that “RTWPB-NCR has approved a resolution granting a P15 increase in the daily basic minimum wage and continuing a P15 Cost of Living Allowance (CoLA) in effect since January 2014.”
The latest raise will bring minimum wage in Metro Manila to P444 for workers in the agricultural sector and to P481 for those in non-agriculture businesses.
The order mandating the latest increase will take effect some time next month, 15 days after publication, Mr. Avila said, adding that the National Wages and Productivity Commission is expected to affirm the decision this week. It is the fifth wage hike since the Aquino administration took office.
“The decision of the RTWPB-NCR to adjust the minimum wage was consistent with the government’s policy of granting regular, moderate, and predictable minimum wage adjustments, taking into consideration the needs of workers and their families, as well as the need to maintain stability in the business environment...” Mr. Avila said in the DoLE statement.
Metro Manila’s daily minimum wage was last adjusted in an order of the regional board that took effect on Oct. 4, 2013, involving a P10 increase. Other regions followed suit.
This year’s pay increase will directly benefit 587,000 workers, Mr. Avila added, clarifying that the wage order applies to minimum wage earners only.
But while DoLE estimates that the new order will raise employers’ “effective labor cost per employee working six days a week by 3.2%,” a group of personnel managers said cost will necessarily rise across employee segments.
“Setting minimum wages is actually not a good idea... It creates undue pressure and sets a bad precedent,” Noel D. Baliscas of the People Management Association of the Philippines said by phone, explaining it pushes employers to adjust other salaries “to maintain seniority in terms of nature of work or years of service.”
“Distressed” establishments, retail and other service businesses regularly employing up to 10 workers, and those affected by natural calamities may apply for exemption for a year from coverage of the new wage order.
DoLE said in its statement that the latest decision “took into through consideration several factors, including erosion in minimum wage; inflation rate; possible impact of the minimum wage adjustment on prices of goods and services as well as on employment... the current economic condition in the region; employers’ ability to pay; and results of continuing studies, sectoral consultations and public hearings.”
Mr. Avila said that the latest increase brings minimum wage-average wage ratio to 75%, close to an “ideal” level of 40-70%, down from 80% when the current administration took office in mid-2010. “The applicable minimum wage-average wage ratio for the country is not too close to allow for bipartite approaches and flexibility in plant level negotiations for further benefits,” he said.
The increase stemmed from two petitions: one by the Trade Union Congress of the Philippines (TUCP)-Nagkaisa faction that sought a P136 across-the-board increase, and another by the Association of Minimum Wage Earners and Advocates that asked for a P734 increase to be implemented in equal tranches of P146.80 each for five straight years. Both groups cited rising utility costs and higher Metro Manila railway fares.
Vicente R. Leogardo, Jr., who represents the Employers Confederation of the Philippines in NCR’s wage board, said the P15 increase strikes a balance between employer and worker interests.
“What I can say... as employer representative in the wage board is that the increase was tied to the erosion of P19.11 as of February,” Mr. Leogardo said in a text message. “We consider the increase as fair and equitable to both labor and employers under prevailing circumstances.”
Another business group said the government should do away with yearly wage increases to keep the country’s edge in terms of labor costs over its peers.
“That would be an additional burden, considering the ASEAN Economic Community is coming up,” Alfredo M. Yao, president of the Philippine Chamber of Commerce, Inc., said in a phone interview, referring to the Association of Southeast Asian Nations.
“After this, salary increases should not be yearly, nor legislated (which would be across the board, not just for minimum wage). As things stand, our salaries are already somewhat higher than those of our neighbors.”
But TUCP-Nagkaisa Spokesperson Alan A. Tanjusay described the increase as “unacceptable.”
“This amount is revolting. Rather than closing the gap between rich and poor, government officials in the board have further widened the gaping inequality among Filipinos -- between a few elite and a famished majority who live to survive by the day,” Mr. Tanjusay said in a statement sent shortly after the wage board’s announcement.
“We dare DoLE, DTI, and NEDA to show the formula they used as basis for the new wage order and subject it to healthy discussion rather than allow their silence to create a conclusion that the amount was taken out of thin air,” he added, referring to the Department of Trade and Industry and the National Economic and Development Authority.
ANTICIPATED
Metro Manila’s approved increase in floor wage is not expected to stoke inflation and nor, by itself, alter the neutral stance of the Bangko Sentral ng Pilipinas (BSP) on monetary policy, a senior central bank official said yesterday.
“We have already anticipated that (wage hike) and incorporated its impact on our latest forecasts,” BSP Deputy Governor Diwa C. Guinigundo said in a text message.
The BSP expects the rise in prices of widely used goods to settle within 2-4% this year and next, with average forecasts of 2.3% in 2015 and 2.5% in 2016.
Asked if the pay raise will affect the neutral stance of the Monetary Board when it meets on March 26, the BSP official replied: “It would have if it is not anticipated and not considered in the forecast. So whatever monetary policy stance the board will decide on would have already considered its impact on future inflation.” -- By Melissa Luz T. Lopez, Reporter with Daryll Edisonn D. Saclag BusinessWorld
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