Before being retrenched for protesting condiments manufacturer NutriAsia for its various labor rights violations, Alvin Lascano, a machine operator, used to receive Central Luzon’s (Region III) minimum wage of Php380.00. According to the government, wages are necessarily rationalized across the nation depending on the varying costs of living in the regions.
“Pero hindi naman nagkakalayo ang presyo ng mga bilihin sa Maynila at sa Bulacan,” Alvin said. Asked what items in Bulacan are almost the same as in Metro Manila, he answered, “Gasolina, delata, bigas, noodles, tinapay, softdrinks, kape, asukal, sabong panlaba at panligo – lahat naman po (Gasoline, canned goods, rice, noodles, bread, softdrinks, coffee, sugar, laundry and bath soaps – everything actually).”
Alvin remains a contractual worker at NutriAsia even after serving the company for 10 years. His take-home pay depends on the number of days that he is called to work, averaging 20 days per month, erratically-renumerated overtime work, and how much the company deducts in terms of Social Security System (SSS) and Pag-ibig Mutual Development Fund (Pag-ibig) benefits. The amount, which he combines with the small income of his parents from fishing, averages on a little over Php500 per day.
“Hanggang pagkain, tubig, kuryente at pang-upa lang ang pilit namin pinagkakasya (We have to stretch our budget to cover food, water, electricity and rent),” Alvin said. Also providing for 7 siblings going to school, Alvin said that they barely have anything left to spend on maintenance medicines for their mother who recently had a stroke.
Not unlike the experience of millions of low- and even no- income households, spiraling prices with oil price spikes and additional Tax Reform for Acceleration and Inclusion (TRAIN) levies are only making things more difficult for workers like Alvin. His family’s plight points to the imperative for a substantial wage hike nationwide, among other calls in the assertion of Filipino workers’ rights.
A substantial wage hike – and not an increase of a few pesos only – is much-needed for workers and their families to be able to cope with the rising cost of goods and services.
The currently highest minimum wage of Php512 in the National Capital Region (NCR) is not even half of the Php1,168 per day family living wage (FLW) or the amount needed by a family of six as of May 2018 per IBON estimates.
Moreover, the real value of the minimum wage has been eroding. Inflation has reached a five-year high at 4.6% last month. Yet the real value of the minimum wage has eroded by Php16.25 since the last wage hike in October 2017 to Php447.94 in April 2018. Since President Rodrigo Duterte was sworn into office, the real value of the minimum wage has eroded by Php18.79.
Not all wage and salary workers receive the minimum wage. According to latest available data, only 24.6% of over 26 million wage and salary Filipino workers receive the minimum wage, while 29.4% receive more than the minimum wage. A huge 46.1% of wage and salary workers get less than the minimum in wages.
Firms and the economy as a whole have more than enough profits to support a substantial minimum wage. A government determined to take the necessary steps for the people to be able to cope with rising prices should be able to wield its authority for employers to comply.
First off, a considerable amount of wealth is being produced by Filipino workers. In fact, their contribution to total gross domestic product (GDP) has been rising. According to the Philippine Statistics Authority (PSA), the contribution of each worker to total GDP increased from Php196,179 in 2015 to Php198,215 in 2016, bringing the average daily contribution of each worker to the economy to some Php759.44 per day.
Secondly, computations show that a substantial wage hike is doable.
The 2015 Annual Survey of Philippine Business and Industry (ASPBI) of the PSA shows that the 34,740 establishments employing 20 or more have Php1.7 million in total profits and 4.5 million employees.
Raising the average daily basic pay of wage and salary workers to, say, Php750, as demanded by labor groups, transfers just Php473.2 billion to workers’ pockets.
This is only a 28.3% decrease in profits – and should not affect business operations. This should not drive up inflation as long as employers agree to trim their fat profits instead of passing on the higher costs of production entirely to consumers.
In particular, the country’s largest corporations and the wealthiest families owning these can easily absorb the abovementioned substantial wage hike. Smaller producers in micro, small and medium enterprises (MSMEs) will also be able to afford the wage hike with government support such as cheap and easy credit, marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities. MSMEs will also benefit from increased worker demand for their goods and services in the domestic market.
A substantial wage hike can be beneficial not only to workers and their families, but to the Philippine economy. For instance, setting a Php750 minimum wage across all regions will raise the Filipino worker’s take-home pay by Php8,076 per month. Though it may still fall short of the FLW, raising the minimum wage to Php750 nationwide will inarguably increase workers’ purchasing power.
In turn, workers and their families’ increased demand for goods and services can necessitate a higher level of production, thus stimulating more economic activity.
Additionally, a substantial wage hike can ease inequality as specific amounts of wealth, otherwise concentrated in the hands of a rich few, are transferred directly to workers and their families.
Instituting a meaningful national minimum wage can also help address the high levels of poverty incidence across the regions.
Couple with long-term reforms
As for the claim of employers and government’s economic managers that raising wages will shun foreign investors and make the country less globally competitive, studies show that lower wages do not necessarily attract more investments. Rich countries that have among the world’s highest minimum wages have attracted more foreign direct investments (FDI).
According to the Organisation for Economic Cooperation and Development (OECD), among the top recipients of FDI globally in 2017 were the United States (US$287 billion), the Netherlands (US$58 billion), France (US$50 billion) and Australia (US$49 billion). In the same period, these countries also reportedly had among the highest minimum wages in the world: $7.25 per hour in the US, Eu9.11 per hour in the Netherlands, Eu9.88 per hour in France, and $18.29 per hour in Australia.
This is not to say that increasing FDI in the Philippines has ever solved joblessness and underdevelopment under a business-biased—instead of people-centered—policy environment. If anything, the need for the country to develop internally instead of relying on external hence shallow sources of growth—such as investments, debt, overseas workers’ remittances and business process outsourcing—is underscored.
The clamored Php750 minimum wage nationwide can be a measure towards the reversal of market-oriented policies including wage rationalization, and labor flexibilization and contractualization, that have kept the Filipino working people poor and the nation underdeveloped. It needs to be accompanied by the strengthening of local sources of progress such as agriculture. These can fuel the country’s own light and heavy industries that will be the base of quality, secure, and decent-paying jobs.