Employers can very well afford to raise the minimum wage to Php750 which only entails a small cut in their profits, research group IBON said. The Duterte administration should support this hike which will help millions of Filipino households dependent on wages and salaries cope with the rising cost of goods and services, said the group.
Current minimum wages are far from IBON’s estimate of the family living wage (FLW) needed by a family of five. The current minimum wage in the National Capital Region (NCR) of Php537 is already the highest in the country, but it is Php467 short of the Php1,004 FLW as of March 2019.
IBON said that raising the minimum wage to Php750 will significantly raise the incomes of Filipino workers. The group’s computations also show that employers can afford to increase the minimum wage they pay to Php750.
In the NCR, raising the average daily basic pay (ADBP) of Php562 to Php750 will add Php4,095 to the monthly income and Php53,231 to the annual income (including 13th month pay) of employees. IBON pointed out that this will only cost Php115 billion out of the Php1.17 trillion in profits of the 14,414 establishments in NCR, which is equivalent to just 9.8% of their profits.
Raising the ADBP of Php401 nationwide to Php750 will in turn add Php7,649 to employees’ monthly income and Php99,432 to their annual income (including 13th month pay). This will cost the 35,835 establishments nationwide just Php465 billion or only 21.5% out of their Php2.16 trillion in profits, as per IBON computations.
The group stressed that meaningful wage hikes are doable if only companies were willing to accept a small cut in their profits. IBON also pointed out that raising wages will not be inflationary if companies share a little more of their profits with workers instead of passing the wage hike on to consumers as higher prices.
These were estimated using the latest Annual Survey of Philippine Business and Industry (ASPBI) data of the Philippine Statistics Authority (PSA) for enterprises with 20 or more workers. IBON however underscored that the government can help micro, small and medium enterprises afford the wage hike by providing them tax breaks and incentives, cheap credit, subsidized utilities, and technology and marketing support.
The growing productivity of Filipino workers is among the main drivers of economic growth and they deserve a significant wage increase, IBON said. The richest individuals and biggest corporations in particular have more than enough for granting wage increase. It is the government’s responsibility to ensure that workers get a fairer share of the gains from economic growth rather than have these gains concentrated in the hands of a few, concluded IBON.###