A significant wage hike would go far in making the Aquino government’s promise of change from previous administrations more concrete.

As government deliberates on a minimum wage increase, research group IBON said that granting a Php40-wage hike would just bring the real value of workers’ wages to the highest it was under the Arroyo administration.

The Arroyo administration granted a Php15 wage increase in February 2002 which raised the mandated minimum wage to Php280, equivalent to Php258 at 2000 prices. A Php40-wage hike today would raise the mandated minimum wage to Php444 which would just be equivalent to Php258 at 2000 prices.

In effect a wage hike of less than Php40 this year would mean that the Aquino administration is falling short of what the previous Arroyo administration was able to give, albeit only momentarily. The Arroyo administration increased the minimum wage eight times with nominal wage hikes ranging from Php12 (August 2008) to Php22 (July 2010).

The current minimum wage of Php404 is only worth Php235 in real terms (deflated with inflation rates up to March 2009). There have been 23 NCR wage hikes in the last four administrations since 1986 ranging from Php4.00 (May 1996) to Php26.50 (November 2000).

IBON also responded to allegations made by some economists that a wage hike would lead to inflation and a rise in unemployment. A significant wage hike such as of Php125 will not increase prices or lead to layoffs if employers accept a cut in the profits. Prices will not increase if employers do not pass the wage hike on to consumers in the price of their products, the group said. Layoffs meanwhile will not happen if employers do not insist on reducing their workforce so that they still spend the same amount on wages and salaries.

A significant wage hike would go far in making the Aquino government’s promise of change from previous administrations more concrete. On the other hand, another insignificant wage hike would only continue decades-long anti-worker tendencies in government wage-setting and economic planning. (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.