Wage boards clustering proposed
A LAWMAKER is asking the House Committee on Labor and Employment to consider his idea of clustering the Regional Tripartite Wages and Productivity Boards (RTWPB) for a progressive scaling of wage rates.
“The clustering I suggest groups together regions that are economically interdependent because of the mobility of labor, goods, and capital among them,” Manila Rep. Joel R. Chua told BusinessWorld in a Viber message.
He said this would allow regions with low wage rates to catch up with the region with the highest pay rate in the cluster.
However, Foundation for Economic Freedom President Calixto V. Chikiamco said that “clustering negates the original intent of RTWPBs as each respective region have different cost and employment conditions” which should be considered in wage setting.
Similarly, Federation of Free Workers President Jose “Sonny” G. Matula buckled at the suggestion since their advocacy is focused on “a significant one-time wage hike to effectively stimulate the local economy.”
“We beg to disagree with clustering, and we go for P150 a day (minimum wage increase),” he said.
Mr. Chua recommended that RTWBs be clustered as the current regional wage systems are too complicated given the range of varying minimum wage rates in each region that businesses must adhere to.
“We have a complicated minimum wage system. Too many tiers — one for every region, and within some regions there are many tiers as well,” he said.
Earlier, members of the House introduced bills on increasing minimum wage rates due to inflation and the surge of prices on basic needs and commodities, which have decreased the real value of wages received by workers.
“Minimum wage increase at a national level is long overdue,” Party-list Rep. Raoul Danniel Manuel told BusinessWorld in a Viber message. “Prices have soared while the real value of wages has stagnated.”
Mr. Manuel, who is also a member of the House labor and employment committee, said that the across-the-board increase in the minimum wage would “enable the workers to purchase goods and services” which will help increase the circulation of money “in the economy and have a positive effect on small businesses.”
For Mr. Chikiamco, a legislated wage increases could induce “slower growth, higher unemployment, lower investment spending, and a wage-price spiral,” which would hurt the local economy.
He said the proposed minimum wage hike will only hurt workers in the informal sector from the effects of “spiraling inflation.”
“The legislated wage increase will only benefit only about 10% of our workforce. It won’t benefit informal workers like motorcycle-taxi drivers, market vendors, fishermen, ambulant cigarette vendors,” Mr. Chikiamo said. “On the contrary, these informal workers, which are 10 times more than the organized minimum wage earners, will suffer greatly from the spiraling inflation that a legislated wage increase will bring.”
For his part, Philippine Chamber of Commerce and Industry (PCCI) President George T. Barcelon told BusinessWorld that business groups are not supporting the proposed legislated wage hikes as they are “concerned” that the “effects will be negative” as some “micro, small and medium enterprises may not be able to afford such an increase.”
In response to the concerns of business groups, IBON Foundation Executive Director Sonny Jose Enrique “Sonny” A. Africa said that the wage hikes will only be inflationary if employers increase prices for their sold products and services instead of “giving this to workers out of their profits.”
“A P100 across-the-board wage hike is equivalent to just a 7.1% cut in profits across all establishment sizes,” Mr. Africa told BusinessWorld in a Viber message. On the other hand, a P350 across-the-board minimum wage hike is set to cut 25% of establishment profits.
“Big businesses, which employed 37% of workers in the formal economy in 2022, can shoulder legislated wage hikes,” Mr. Manuel said. “Small businesses can be assisted by the government through wage subsidies which are part of the bills we filed for wage hikes.” — Kenneth Christiane L. Basilio