The country’s largest corporations and the wealthiest families owning these can easily absorb the substantial wage hike. Smaller producers in micro, small and medium enterprises (MSMEs) can also afford the wage hike with government support.
MANILA — Contrary to claims by the government and big employers, raising the minimum wages nationwide to Php750 is actually doable, research group IBON said in a statement today. Not only is such a wage hike doable, it also need not spike prices further, and it will benefit millions of Filipino workers and the economy. The group cited the following reasons:
1. Raising minimum wages nationwide to Php750 is doable if owners of establishments allow a small portion of their profits to go to their workers instead.
Based on latest available data from the country’s establishments and the economy as a whole, they have more than enough profits to support the PhP750 wage hike, IBON said. According to the 2015 Annual Survey of Philippine Business and Industry (ASPBI) of the Philippine Statistics Authority (PSA), 34,740 establishments employing 20 or more earned Php1.7 trillion in total profits and 4.5 million employees. Raising the average daily basic pay of wage and salary workers from the nationwide average of Php378.71 to Php750 transfers just Php473.2 billion to workers’ pockets. It means a 28.3% decrease in profits. Workers will get to take home an additional Php8,076 per month on average.
This still falls short of the family living wage and does not necessarily bring everyone up to a decent standard of living but such an increase will provide immediate relief to millions of Filipino workers and their families, the research group IBON said.
2. Raising minimum wages nationwide to Php750 will not necessarily hike inflation, nor cause massive layoffs.
Price hikes and massive retrenchments after a wage increase mostly happen only if employers choose to try to recover the profits they ‘lost’ to pay the workers’ wages. This means that prices need not go up and workers need not be laid off if the employers would accept the slight cut into their profits.
3. A substantial wage hike is in order since the workers’ productivity has risen and the wages have not yet been adjusted to even reflect it.
As it is, wages are not even keeping up with the rising productivity of workers so their ever-growing contribution to the economy increases employer profits more than improves workers’ welfare. For instance, according to the Labor Productivity Statistics of the PSA, ta he contribution of each worker to total gross domestic product (GDP) increased from Php196,179 in 2015 to Php198,215 in 2016 (up by 2.2%). This means that the average daily contribution of each worker to the economy amounts to some Php759.44 per day, which is more than double the average daily basic pay and more than the proposed national minimum wage.
4. The economy will benefit by increasing workers’ purchasing power and aggregate demand which stimulates higher production and increases economic activity.
Raising minimum wages nationwide reduces inequality by transferring wealth overly concentrated in a few to millions of workers and their families. According to IBON, the country’s largest corporations and the wealthiest families owning these can easily absorb the substantial wage hike. Smaller producers in micro, small and medium enterprises (MSMEs) will also be able to afford the wage hike with government support such as immediately providing cheap and easy credit, giving marketing support, nurturing locally-integrated supply chains, and improving their scientific and technological capabilities. MSMEs will also benefit from increased worker demand for their goods and services in the domestic market, said the group.