Senate OK’s PHP 100 wage increase on 2nd reading

The Philippine Senate on Wednesday approved on second reading a bill calling for a PHP 100 ($1.78) across-the-board minimum wage increase for workers in the private sector.

The increase will ensure a “living wage” for the Filipino workforce, according to Senate Bill No. 2534 or the proposed Wage Increase Act of 2023.

The measure seeks to improve the living conditions of Filipino families, Senate President Juan Miguel F. Zubiri, who sponsored the bill, told the plenary.

“The Senate is united in addressing the needs of Filipino workers,” he said in Filipino. “The Senate hears the call of the nation for decent pay, and we are not just listening but taking action too.”

The Senate president expects the bill to be approved on third and final reading next week.

The Employers Confederation of the Philippines (ECoP) said a legislated wage would only benefit 16% of the country’s workforce.

“About 84% of the working force, or those in the informal sector, would not benefit from the legislated wage increase, and only about 10% would temporarily benefit from it only for a few months,” ECoP President Sergio R. Ortiz-Luis, Jr. said by telephone.

“A P100 legislated wage hike is sure to be catastrophic inflationary,” he added.

He also said it betrays the Philippines’ “erratic policies” that foreign investors shun. “You have a process with the regional wage boards and all of a sudden, you see a legislated wage increase. What do you think investors will say?”

A Filipino family of five needs at least PHP 13,797 a month or PHP 460 a day to meet their basic needs, according to the Philippine Statistics Authority.

A bloc of congressmen has also filed a bill seeking a PHP 750 daily wage hike for private sector workers, including those in special economic zones, freeports, and agriculture.

Philippine labor groups have backed a legislated wage hike, saying it would unleash consumer spending power and raise worker pay above poverty levels.

Calixto V. Chikiamco, president of the Foundation for Economic Freedom, said the proposal is bad for the economy and could worsen inflation.

“Worse, a national wage hike doesn’t take into consideration the different cost factors and employment figures across regions,” he said in a Viber message. “It will likely cause a wage price spiral that will harm Filipino workers in the long run.”

He said the legislated wage increase would cause more joblessness as companies adjust to higher wages while suffering from stagnant productivity through downsizing.

Inflation eased to 2.8% in January from 3.9% in December and 8.7% a year ago, the slowest in three years.

Metro Manila’s daily minimum wage rose by PHP 40 to PHP 610 in June, much lower than the PHP 570 increase sought by some labor groups.

The International Labour Organization (ILO) expects the global jobless rate to rise to 5.2% this year from 5.1% a year earlier. In a report last month, the ILO said the global labor market is set to “deteriorate moderately” because of increased joblessness in advanced economies.

“The erosion of real wages and living standards by high and persistent inflation rates and rising costs of housing is unlikely to be offset quickly,” it said.

Jose Enrique A. Africa, executive director of think tank Ibon Foundation, said a legislated wage hike would help workers more than the regional wage-setting system given rising prices. It would also prop up the economy by boosting household spending, he added.

“Wage increases will also be spent locally and on micro, small and medium enterprises including informal enterprises in their communities, which will spur local economic activity,” he said in a Viber message.

Marikina City Rep. Stella Luz A. Quimbo on Feb. 12 said the government should focus on easing inflation and boosting productivity to ease the risks of wage increases.

The across-the-board wage increase is a starting point to address the shortcomings of the country’s wage-setting system, Josua T. Mata, secretary-general of the Sentro ng mga Nagkakaisa at Progresibong Manggagawa, said in a Viber message.

“Should it be legislated, PHP 100 could still ease the burden on minimum wage earners,” he said. “This would in turn motivate them to do better.”

A PwC Philippines survey in August showed that 29% of Filipino workers were looking for new jobs and demanding higher pay amid spiraling prices.

Labor groups have urged the government to reform the regional wage-setting system to ensure wages keep up with the rising cost of living.

Labor Secretary Bienvenido E. Laguesma has said his agency would defer to Congress on legislated wage hike proposals. – John Victor D. Ordoñez, Reporter