Minimum wage worth less under Marcos, since peak under Aquino — IBON

June 24, 2024

by IBON Foundation

As the National Capital Region (NCR) wage board deliberates the petitions of various labor groups, research group IBON stressed that NCR wages are not keeping up with either inflation or worker productivity. The group said that the real value of the daily minimum wage has fallen since its peak under the Benigno Aquino III administration and has lagged behind productivity for decades. Filipino workers urgently need and deserve a substantial wage hike towards a family living wage.  A wage increase would also address years of injustice where workers received low wages despite their increasing productivity that has created huge profits for employers.

IBON said that inflation has eroded the real value of the minimum wage making this worth less than its peak under the Aquino III government. The NCR minimum wage hit its highest value in June 2016 when the Php491 nominal minimum wage was worth Php538 in real terms, measured at constant 2018 prices to take away the effects of inflation. Four incremental wage hikes since then have not been enough to cope with rising prices and the Php610 nominal wage in May 2024 is worth just Php501 in real terms, or 7% less than in June 2016.

The group also pointed out that the 30 NCR wage hikes since the regionalization of wages in 1989 has not improved the earnings of minimum wage workers. The Php501 real value of the minimum wage is virtually the same as the Php499 real wage 34 years ago when the nominal wage was at Php89.

IBON said that workers and their families struggle with poverty wages and need an immediate large wage increase to bring immediate relief from the rising cost of goods and services. In the NCR, the Php610 minimum wage is only half (51%) of the Php1,197 FLW for a family of five as of May 2024. Computed for a 5-day work week, the minimum wage translates into some Php14,373 monthly in take-home pay over a year which is 8.5% less than the Php15,587 poverty line for a family of five.

The group also said that a meaningful wage increase is needed to correct how wages have lagged behind worker productivity for at least two decades, creating huge profits for employers. From 2000 to 2023, worker productivity grew by 62% but the minimum wage by only 9%, both measured in real terms and adjusting for inflation. The group said this shows that Filipino workers are not fairly compensated and employers disproportionately pocket growing worker productivity as profits.

IBON said that NCR establishments have more than enough profits to give a large minimum wage hike. Compensation is just 14% of expenses across NCR establishments of all sizes in all sectors, according to the latest Annual Survey of Philippine Business and Industry (ASPBI) for 2021. Assuming that one-half (50%) of the employed are at minimum wage or below, IBON for instance computes that a Php150 minimum wage hike is equivalent to just 4% of profits. Employers can give this tiny share of profits to workers without raising prices, causing inflation and undertaking layoffs.

IBON said that the Marcos Jr administration should not just pay lip service to raising the minimum wage or even give just a token amount to appease labor groups’ clamor. This would be a disservice to millions of Filipino workers who genuinely need a substantial wage hike and who have yet to be justly compensated for their labor.