PH minimum wages are family poverty wages – IBON

April 28, 2023

by IBON Foundation

Research group IBON said that Filipino workers and their families are barely surviving on the minimum wage because this is even less than the official poverty threshold for a family of five. The government has been giving fewer and smaller wage hikes particularly under the Duterte and now Marcos Jr administrations. The group said that immediate and meaningful wage hikes are urgent amid high prices, low incomes and widespread joblessness and informality.

According to the Philippine Statistics Authority (PSA), the poverty threshold for a family of five nationwide is Php12,030 on average monthly. This is based on the Php79 daily per capita poverty threshold converted to monthly for a family of five.

The average nominal minimum wage (MW) nationwide is however just Php8,902 monthly. This is Php3,128 or 26% less than the average monthly poverty threshold which, in effect, makes the minimum wage a family poverty wage. This is even further away from average monthly family living wage (FLW) – Php14,885 or 63% less, to be exact.

The average nominal MW nationwide is computed by getting the average of the 17 regional minimum wages, which in turn are estimated by converting the respective regional minimum wages into their Estimated Equivalent Monthly Rate (EEMR) for a 5-day work week. The average monthly FLW is computed by getting the average of the 17 regional FLWs as estimated by IBON.

In the National Capital Region (NCR), the average nominal MW is Php12,398 monthly. This is Php1,343 or 10% less than the Php13,741 poverty threshold for a family of five in NCR. Compared to the NCR family living wage, it is a much bigger gap at Php12,811 or 51% less.

The situation is worse in the 16 other regions of the country. Nominal MWs are 13% (Region IV-A) to 36% (BARMM) less than the poverty thresholds, and 54% (Region IV-A) to 71% (BARMM) less than the FLWs.

IBON said that the wage situation started to become even worse under the previous administration. Even before the COVID-19 pandemic and harsh lockdowns, the Duterte government had among the fewest wage hikes and the lowest increases among the six administrations since the Marcos dictatorship. The nominal wage has failed to cope with the constant increase in prices, thus causing the historic decline of the real value of the minimum wage.

In NCR, for instance, there were only three (3) wage hikes and a 16.1% increase in the nominal wage during the Duterte administration. These wage hikes were less in number and smaller in magnitude than under the administrations of Cory Aquino (6 hikes, 218.9% increase), Ramos (7 hikes, 67.8% increase), Estrada (2 hikes, 26.3% increase), Arroyo (7 hikes, 52.8% increase), and Benigno Aquino (6 hikes, 28.5%).

Meanwhile, the current Marcos Jr administration has yet to mandate any wage increase despite heightening public clamor as well as petitions and bills filed by labor groups and lawmakers, respectively.

IBON said that accelerating inflation since the start of the new administration makes wage hikes all the more urgent. Nominal wages were never enough to provide a decent standard of living but are now even falling in real terms. Instead of concealing how millions of Filipino workers and their families are struggling to live on family poverty wages, the government can and should immediately give a substantial and meaningful wage increase.