For reference: Mr Sonny Africa (IBON executive director) 0928-5053550 | As labor groups file petitions for a substantial wage increase, a study by research group IBON reveals that increases in the mandated minimum wage has not kept pace with inflation in the last decade.
Taking inflation into account, the highest real mandated minimum wage since 1986 in the National Capital Region (NCR) was the Php255 reached in February 2002 (measured in 2000 prices).
Despite seven wage hikes since 2002, the real value of the mandated NCR minimum wage has fallen by some 3.5% from that peak in February 2002 to be worth just Php246 as of December 2011.
The nominal mandated NCR minimum wage was Php280 in February 2002 and Php426 in December 2011 for a seemingly large 52.1% increase. However this increase was eroded by inflation where prices in Metro Manila prices rose 57.6% over that same period, as measured by the consumer price index (CPI).
The real value of the mandated minimum has remained basically unchanged for over a decade, according to IBON. The real value of the NCR minimum wage of Php246 as of end-2011 is just about at the average real minimum wage over the last eleven years of Php243. While the daily minimum wage seemed to have significantly increased from Php250 in January 2011 to Php426 in December 2011, this has barely kept pace with rising prices over this entire period.
Wage data from the National Wages and Productivity Commission (NWPC) was deflated using inflation data from the Bangko Sentral ng Pilipinas (BSP).
IBON added that the even the average daily basic pay that wage and salary workers actually received has not kept pace with the rising prices of goods and services at both the national and at NCR levels. The basic pay refers to pay received and is different from the mandated minimum wage which is not necessarily the amount paid. The Bureau of Labor and Employment Statistics (BLES) defines basic pay as pay for normal time prior to deduction of social security contributions, withholding taxes and others; it also excludes those paid on commission basis, honorarium and boundary as in the case of jeepney, tricycle and bus drivers.
The average daily basic pay that wage and salary workers in the country actually received increased from Php222 in 2001 to Php321 in 2011 (preliminary July 2011 estimate). The additional Php99 amounts to a 44.6% nominal increase in wages but was not even enough to make up for the continuous increase in prices which increased by 62.4% over the same period. Inflation over this 11-year period averaged 5.2% (measured at 2000 prices), including a peak of 9.3% in 2008 upon the steep increase in oil prices then. The nominal increase in daily basic pay was then more than offset by inflation and Filipino workers saw the real value of their wages decline by Php24, or 10.9%, between 2001 and 2011.
In NCR, the average daily basic pay of wage and salary workers rose from Php291 in 2001 to Php415 in 2009, or a 42% increase. However the 46% increase in prices over this same period meant that the real value of their basic pay actually fell to Php283 or a 3% decline. This discrepancy underscores how demands for increases in the minimum wage should not be compared against inflation on a merely annual basis but should be cumulative to be able to accurately capture the erosion in the real value of workers’ wages.
According to IBON, granting a substantial wage hike will improve the welfare of workers and their families especially amid rising prices of oil, water, power, and basic commodities. (end)
IBON Foundation, Inc. is an independent development institution established in 1978 that provides research, education, publications, information work and advocacy support on socioeconomic issues.
