The substitute bill mandating a Php200 daily across-the-board wage increase for private sector workers approved last week by the House Committee on Labor and Employment is affordable for employers and will give relief to millions of workers and their families, said research group IBON. Employers are scare-mongering when they say this will raise prices or lead to job losses, said the group, and are just resisting sharing a part of their profits with their workers.
IBON noted that a legislated across-the-board wage hike today will be the first one in 35 years since the last one in 1989. This wage hike will be the result of 25 years of lobbying since the Php125 across-the-board increase proposed by labor leader and Bayan Muna Rep. Crispin Beltran in 2001.
Averaged across all 17 of the country’s regions, the real value of the mandated minimum wage today is worth 23% less than it was in 1989 when wage-setting started to be regionalized. The minimum wage in 16 regions is worth 2-52% less today than 35 years ago, taking inflation into account. The National Capital Region (NCR) is a sole exception where the minimum wage is worth a marginal 3.8% more.
The group said that the proposed Php200 daily across-the-board wage increase will basically just restore decades of erosion of purchasing power for minimum wage earners who will now take home almost 10% more in real terms, on average nationally. This will bring workers and their families some relief even if there is still a shortfall of Php559 from the estimated family living wage (FLW) of Php1,224 as of end-2024, again measured on average nationally.
Employers can afford this wage hike, according to IBON’s estimates on the Philippine Statistics Authority’s (PSA) latest Annual Survey of Philippine Business and Industry (ASPBI) for 2022. The country’s largest survey of establishments noted that employee compensation amounts to just some 11% of total firm expenses across all formal micro, small, medium and large enterprises in all sectors nationwide. All establishments were also found to have made Php3.1 trillion in profits in 2022 – Php1.7 trillion by large, Php285.5 billion by medium, Php822.6 billion by small, and Php302.5 billion by micro firms.
The Php200 across-the-board wage hike for all salary earners, meaning not just for minimum wage earners, amounts to Php359.8 billion more in compensation, which is equivalent to just 11.8% of total profits. By establishment size, this wage increase is some 11.1% of large firm profits, 9.1% of medium firm profits, 12.9% of small firm profits, and 15% of micro firm profits. These are broad averages and the government can support smaller firms that can establish with their financial statements if they really are unable to afford the wage hike.
The ASPBI reports just 281,826 formal establishments employing 6.4 million workers, including 196,607 micro establishments with 800,469 workers. Although there are only 4,118 large firms, they account for half or 3.2 million workers in formal establishments. These are the firms that are potentially within the scope of the labor department and inspections for compliance with labor and wage laws. The often-cited figure of over 1 million micro enterprises with 2.8 million workers is from the 2022 List of Establishments (LE) that covers formal establishments and as much informal establishments as the PSA could realistically cover. In either case, the micro establishments that anti-wage hike employers hide behind only account for a minority of workers – 13% of employment in the ASPBI and 33% in the LE.
The employer argument that only a few will benefit is also grossly erroneous, stressed IBON. First, employers should give any and all relief to their workers that they can give, such as a Php200 wage increase, regardless of how few or many their employees are. Second, putting Php200 in workers’ pockets means that they will spend Php200 more every day buying goods and services from the informal workers in their communities. Not only is the propensity to consume of workers higher than for employers, their propensity to consume locally is also much higher resulting in a substantial multiplier effect in local economies.
IBON said that a meaningful wage hike is among the many measures the Marcos Jr administration can take to make sure that ordinary working class Filipinos are not left behind by economic growth, which just keeps enriching a few on the backs of millions of workers.
