IBON says of wage hike: “Ang bara ay ang di pag-suporta ng pangulo”

May 9, 2024

by IBON Foundation

Research group IBON said that the President’s resistance is the biggest barrier to the legislated wage hikes demanded by workers and other sectors. The proposed wage bills in Congress to various degrees bring wages closer to the family living wage, the group stressed, which corrects years of meager wage increases that have lagged behind profits, productivity and inflation.

In a press conference of various labor groups, IBON executive director Sonny Africa reiterated the justness and viability of a large wage hike. He stressed that over 370 wage orders by the regional wage boards since being created in 1989 have not been enough to keep up with inflation and the average real value of regional minimum wages today is worth 22% less than 34 years ago.

Africa shared IBON computations that minimum wages today are actually family poverty wages, where prevailing regional minimum wages are even less than the official regional poverty thresholds for the first semester of 2023.  The only exception is in the National Capital Region (NCR) where the minimum wage is slightly higher than the poverty threshold. In any case, the average minimum wage of Php441 as of April 2024 across the regions is barely one-third of the average family living wage (FLW) of Php1,208, and falls far short of what is required for minimally decent living.

IBON’s executive director pointed out how more and more of the value that workers create is going to corporate profits and an elite few rather than to workers and their families. Africa for instance noted that labor productivity grew 88% or has almost doubled since 1989 yet the average minimum wage has fallen by over 22%, both measured in real terms. This is still the situation during post-pandemic recovery with profits of the Top 100 corporations growing 104% between 2020 and 2022, profits of all establishments growing by 28% between 2020 and 2021, and the bloated wealth of the 50 richest Filipinos growing by 31% — while the average nominal minimum wage increased by only 11 percent.

Africa went on to argue that raising wages is just and viable, contrary to the doomsday scenarios of employers groups and the government. He explained that employee compensation is on average just 11% of expenses of firms of all sizes and in all industries nationwide. A Php100 across-the-board wage hike is equivalent to just an average of 7.1% of profits of all establishments and 7.5% for micro, small and medium enterprises (MSMEs) and a Php150 wage hike only 10.6% of profits across all establishments and 11.3% for MSMEs. Even a Php663 wage hike that allows the current average wage to reach the FLW is only 47% of all establishment profits and still leaves employers with the majority of profits.

In addition, Africa used historical data to show that it is simplistic scare-mongering to blame wage hikes for inflation. The 39% wage hike in 1989 was the largest in decades, as well as the country’s last legislated wage hike, yet inflation was slower in 1989 and 1990 than in 1988. When inflation went up in 1991 this was mainly due to a drastic peso devaluation, which is a problem to this day.

Africa concluded by reiterating that workers have a right to a living wage and this is not a gift or charity that employers can choose to give or not give, and it is the government’s responsibility to ensure that workers get what is due them. He said that the president’s Labor Day call on wage boards to “review” wages is hollow because he could have instead directed Congress to immediately pass long overdue large legislated wage hikes.

“Suportado ng IBON ang lahat ng proposal para sa dagdag-sahod,” he said. “Kung gugustuhin ng gobyerno, gagawan nila ng paraan. Mas malaki, mas mainam,” said Africa.