Research group IBON said that it is possible for workers nationwide to receive the proposed national minimum wage (NMW) of Php750. Millions of workers and their families will immediately benefit while employers still keep over 70% of their substantial profits. The NMW is an immediate, important, and doable step towards making economic growth genuinely inclusive.
IBON also said that the prices of goods and services need not rise and workers do not have to be laid off if employers accept the slight cut in their clean profits. The group pointed out that the wage hike is necessary to improve workers’ welfare and is good for the economy as a whole.
The amounts of profits transferred to workers’ wages was computed based on data from the 2012 Census of Philippine Business and Industry (CPBI) of the Philippine Statistics Authority (PSA). The census shows that 36,699 establishments with employment of 20 or over had Php1.6 trillion in total profits and 4.0 million employees.
Raising the average daily basic pay of wage and salary workers from the nationwide average of some Php334 to Php750 transfers just Php475 billion to workers’ pockets – this is only a 30% decrease in profits that still leaves employers with a significant 70% of their clean profits. On the other hand, each worker will be able to take home, on average, an additional Php9,089 monthly for their families.
The group added that wage hike is further justified by how the minimum wage has barely kept pace with inflation and even lagged behind rising labor productivity.
According to IBON, the country’s largest corporations and wealthiest families are the most able to absorb the wage hike. The government meanwhile can ensure special support for small producers in micro, small and medium enterprises (MSMEs). This includes immediately providing cheap and easy credit, giving marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities. MSMEs will also benefit from increased worker demand for their goods and services for the domestic market.
IBON added that transforming a portion of profits to higher wages is a shift to domestic demand-driven growth that is more sustainable than relying on external markets especially amid the protracted global crisis. It is a first step to arresting worsening inequality in the country and rectifying gross imbalances in wealth and corresponding political power.
It also begins reorienting the economy from making a few wealthy at the expense of the majority, said the group. Raising wages is one of the most concrete ways for growth to become more inclusive. Low-paid workers will share in the fruits of economic growth and not just a handful of elite families and big corporations. <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.
