Executive warned vs uniform floor wage
By Raynan F. Javil | Posted on September 12, 2016
BUSINESS LEADERS and a central bank official cautioned the Executive branch on its plan to replace the existing region-based minimum wage system with one that sets a nationwide floor pay for private sector workers, saying the latter will discourage investors and risks spiking inflation beyond target besides — eventually defeating the government’s goal of spreading development from key urban hubs like Metro Manila.
“Ayaw ng Presidente natin ng provincial rate, so ang ibig sabihin niyan dapat… pantay lahat ng minimum wage ng mga manggagawa sa buong bansa (Our President does not like provincial rates; that means that there should be a minimum wage that applies to all the country’s private sector workers),” Mr. Maglungsod said.
Last Sept. 1, Labor Secretary Silvestre H. Bello issued a memorandum ordering Regional Tripartite Wages and Productivity Boards “to consult and generate consensus or comments on the anticipated filing of legislative measures proposing a P125 across-the-board increase in the wages of workers of the private sector in the 17th Congress.” Such wage hike bill had been filed as early as the 2004-2007 13th Congress, the memorandum noted.
Mr. Maglungsod said the memorandum was in keeping with the current system, hence the need to go through the regional boards.
“Itong memorandum order na pinirmahan ni Secretary noong nakaraang linggo advising all regional offices ng DoLE na i-convene immediately ‘yung regional tripartite body — kasi ‘yun pa naman ang batas ngayon — na magtalakay na sila ng immediate relief para sa mga manggagawa (The memorandum order the Secretary signed… advising all DoLE regional offices to immediately convene the regional tripartite body to discuss immediate relief for private sector workers, is in keeping with current law),” Mr. Maglungsod said.
“Ang overall direction natin sa loob ng term ni Presidente ay dapat magkaroon na ngnational minimum wage law para pantay-pantay na ‘yung sahod ng mga manggagawa (Our overall direction within the President’s term is to have a national minimum wage law so that the country’s private sector workers will have equal floor pay),” he added.
“Ang next na ruta doon ay pag-kunsulta ng ilang kongresista para at least mapag-aralan at ma-sponsoran na ‘yung national minimum wage law na gusto ni Presidente (The next step is to consult lawmakers in order to at least study and sponsor the national minimum wage law that the President wants).”
CONGRESS, BSP CAUTIOUS
Leaders of both legislative chambers were cautious despite being open to a new minimum wage-setting system.
Asked if the House of Representatives would support the proposal, Speaker Pantaleon D. Alvarez said in an interview on Friday: “Pag-aaralan natin ‘yan (We will study that). I don’t see anything wrong with that proposal, pero kailangan marinig muna ‘yung panig nungemployers (but we first need to hear what employers have to say).”
Senate President Aquilino Martin L. Pimentel III said via text that a national minimum wage is needed as a “floor.”
“But the flexibility of the regional wage committees must be retained so that a minimum wage over and above the national minimum wage may be provided by a region,” Mr. Pimentel said, explaining: “This would be in keeping with a federal system of government” that the administration wants to migrate to.
Sought separately for comment, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo told reporters last week that proposals for a national minimum wage “will warrant some serious study” of its impact on employment, productivity and inflation.
“If the increase in wages is eaten up by the increase in prices then that would be a negative for the labor sector,” Mr. Guinigundo said, referring to expectations by economists that businesses will move to cover higher labor costs by jacking up prices, in turn prompting labor groups to seek another wage hike, hence causing inflation to spiral.
“So before any type of adjustment is considered, I think a more careful study of the numbers — particularly on the consequences of a significant nationwide adjustment in wages — should be conducted first.”
Inflation averaged 1.5% in the eight months to August, well below an official 1.8% forecast average and 2-4% target for the entire 2016, helping the central bank keep borrowing costs steady.
‘NO INCENTIVE’
Donald G. Dee, chairman of the Employers’ Confederation of the Philippines, said: “The problem there is the development of other areas will be delayed because there will be no incentive for us — business — to move there [provinces] if the infrastructure and the logistics are behind…”
Henry J. Schumacher, external affairs vice-president of the European Chamber of Commerce of the Philippines, shared this view, saying: “We support decentralization, but the cost of doing business in the provinces is higher and we have to train people and cope with lower infrastructure.”
“If wages are the same despite the lower cost of living, there is no incentive to invest there.”
Philippine Chamber of Commerce and Industry President George T. Barcelon also urged caution “because when we talk about cost of labor, that is one factor whether we are attractive for investments.” He noted that Cambodia, Laos, Myanmar and Vietnam are “very aggressively positioning themselves to have more foreign investments.”
“I talked to their businessmen and I can sense, yes, we are part of ASEAN (Association of Southeast Asian Nations), but when it comes to business, when it comes to investments, everybody is trying to get more than others if possible,” he said partly in Filipino.
Mr. Barcelon said business groups are “looking forward to the opportunity of talking to the Secretary Bello and express certain concern because that is too big a jump wherein it might, what we call, the cost aspect might be too drastically increased.”
The Foundation for Economic Freedom (FEF), which advocates market-oriented reforms, also cautioned the government on this plan.
“The country already has one of the highest minimum wages in the world relative to average wages, according to the World Bank. Seeking to impose high minimum wages in the entire country irrespective of local conditions of unemployment and cost of living will only drive investments and jobs away from the countryside,” the FEF said in a statement.
It also said that the a national minimum wage will “further deepen poverty and unemployment in the countryside, contrary to the Administration’s policy to rebalance growth away from the National Capital Region (NCR).”
The group also urged the modernization of the labor code to relax its “strict labor security provisions” and consider the establishment of special economic zones where labor-incentive industries can locate.
LABOR GROUPS
Alan A. Tanjusay of the Association of Labor Unions-Trade Union Congress of the Philippines said that the group may “support the repeal of Wage Rationalization Act which will eventually lead to abolition of the wage boards and we also support DoLE plan for an equal increase in national minimum wage nationwide.”
“There is a need to equalize minimum wage in the country because there is almost no or very little difference between the prices of basic goods and services between NCR (the highest in the country) and other regions. Poverty now is widespread and it has no boundary.”
But the P125 proposed before is “obsolete,” Mr. Tanjusay said.
“Hindi na siya applicable today sa conditions (It is no longer applicable to current conditions). We are proposing P154 kung paguusapan, kung tatanungin kami ni (if we are asked by) Secretary Bello…”
Another major labor group, Kilusang Mayo Uno (KMU), said in a statement said that it would push for a P750 daily minimum wage, which compares to Metro Manila’s prevailing P454 and P491 rates.
“This will enforce a genuine minimum wage in the country and bring existing legally mandated minimum wage levels closer to the living wage, which according to independent think-tank Ibon Foundation is already at P1,096,” the KMU explained. — with M. L. T. Lopez
Source: www.bworldonline.com
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