Wage hike possible with transparency, gov’t support

April 9, 2022

by IBON Foundation

As labor groups file wage hike petitions in various regions, research group IBON said that an increase in the minimum wage is doable. If employers are transparent about their revenues and net incomes this will likely show that large corporations and even many medium enterprises are able to hike wages with only a small cut on their profits. The group said that the government can meanwhile provide wage subsidies and other forms of support to micro and small enterprises (MSMEs) who cannot yet afford this.

IBON said that a substantial wage hike is necessary to help Filipino workers cope and recover lost income from the protracted lockdowns and to meet their family’s basic needs.

According to data from the National Economic and Development Authority (NEDA), a total of Php1.04 trillion in household wages and incomes or an average of Php23,806 per worker was lost in 2020 at the height of the pandemic.

Minimum wages which were never enough to meet the basic needs of workers’ households to begin with are now even being eroded by inflation, said the group. For instance, the current highest minimum wage of Php537 in the National Capital Region (NCR) is Php543 short of, or less than half, the Php1,080 living wage IBON estimates is needed for a family of five to live decently as of March 2022.

IBON said that a wage increase is even more urgent because the real value of the minimum wage is eroding and not enough to keep up with rising prices. Between the start of the Duterte administration in June 2016 and March 2022, the real value of the NCR minimum wage eroded by 8.9% from Php538 to Php490 – this is as if almost Php50 were being taken away daily from workers. This is estimated using Philippine Statistics Authority (PSA) inflation data computed with 2018 as the base year.

Real wage erosion is also happening in the regions, said the group. Between June 2016 and December 2021 (base year 2012), the real wage eroded in CALABARZON (by 13.1%), MIMAROPA (by 8.1%), Bicol region (by 7.0%), and Zamboanga Peninsula (by 6.1%).

IBON said that a substantial wage hike is doable if employers, especially big corporations, are transparent about their profits and are willing to give a small portion of this towards higher wages. The group said that workers which have been putting up with substandard wages for decades should not be made to shoulder the burden of determining the possibility of a wage hike. Rather, employers should disclose their profits over the last five years for instance, including during the pandemic, to show if they really cannot afford to give a wage increase.

The group said that the government should then provide wage subsidies and support so that smaller producers in MSMEs will also be able to afford the wage hike. IBON has proposed a Php101 billion immediate wage relief for workers that can be given to MSMEs as a wage subsidy to support a Php100 per day wage increase for three months, as well as Php200 billion in financial assistance to MSMEs.

IBON said that the government can also support MSMEs in other ways including cheap and easy credit, marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities. A higher minimum wage will increase worker demand for goods and services in the domestic market, which will also benefit MSMEs, said the group.