Real wages fall as inflation spikes

June 9, 2022

by IBON Foundation

Higher May inflation pushed the real value of wages to even lower levels and is making basic food and transport services even more unaffordable, research group IBON said. Inflation far outpaces the outgoing Duterte administration’s wage hikes and wage earners are worse off now than six years ago.

The Philippine Statistics Authority reported that May 2022 inflation increased to 5.4% from 4.9% in April and 4.1% in May 2021. In the National Capital Region (NCR), inflation rose to 4.9% in May 2022 which is already over three times the 1.3% rate in January at the start of the year.

IBON said that NCR inflation has driven the real value of the minimum wage here to 10% less than at the start of the Duterte administration. Measured in 2018, the real value of the NCR minimum wage was Php538 in June 2016 falling to just Php484 in May 2022. The two NCR wage hikes, which increased the minimum wage from Php491 in June 2016 to Php537 in May 2022, have not even kept pace with rising prices of goods and services.

The Duterte administration is the only one of the last six administrations where the real value of the NCR minimum wage falls during its term, IBON stressed. The group previously noted that the government has been giving the least frequent and least amount of wage hikes.

Ordinary Filipinos are grappling with higher prices amid low wages and insufficient cash subsidies for households. The price of food in the NCR for instance has increased 20-95% under the Duterte administration, between June 2016 and May 2022.

For example, according to the Department of Agriculture, the price of well-milled rice went up from Php32 to Php40 per kilo; of galunggong from Php140 to Php200; of pork kasim from Php180 to Php360; and of chicken from Php140 to Php190. The prices of some vegetables doubled as in the case of ampalaya (Php60 to Php120 per kilo) and eggplant (Php40 to Php80). As for other vegetables, the price of carrots increased from Php70 to Php80; of potatoes from Php60 to Php70; and of pechay Php60 to Php70. Lakatan and latundan banana prices per kilo increased from Php60 and Php40 to Php70 and Php60, respectively.

Meanwhile, according to the Department of Energy, year-to-date net increases for oil products are Php23.85/liter for gasoline, Php30.30/ liter for diesel and Php27.65/ liter for kerosene.

The Duterte government has not yet distributed the Php500 monthly subsidy for the poorest 50% households that it promised in March, nor the last tranche of universal cash transfers under the Tax Reform for Acceleration and Inclusion (TRAIN) for 2020, IBON said.

Moreover, the less than 300,000 reported actual and pending recipients of fuel subsidies are just a fraction of the 1.9 million people employed in the country’s passenger transport business.

The most recent Php33 wage hike in NCR took effect on June 4. But even then, said IBON, the Php570 nominal minimum wage falls far short of the Php1,093 family living wage for a family of five as of May 2022.

Wage boards in 14 regions also recently issued wage orders granting minimum wage increases from Php30 to Php110. Labor groups however lament these as too little and still urge the Duterte administration to implement a national minimum wage of Php750.