Labor Secretary Silvestre Bello III has ordered all wage boards to immediately start tripartite consultations to expedite possible pay hikes as oil prices were poised to continue their precipitous climb this week, further eroding the buying power of consumers.
“With or without a petition [for wage increase], I gave an instruction to all our regional tripartite wage boards to study the impact of the Tax Reform for Acceleration and Inclusion [TRAIN] Law and to study the economic situation in every region, on the basis of which they can already come up with their recommendation,” Bello said in a radio interview on Sunday.
“We have to be sensitive to the actual economic situation, especially the effect… [on] our workers,” he added.
Bello said he has broached the possibility of giving subsidies to minimum wage earners in case a wage increase is disapproved, but admitted the proposal could cost the government at least P65 billion annually.
Labor Undersecretary Jacinto Paras said regional wage boards must expedite the consultations so that “they will be able to address the messy situation of our country today, especially the hardship that ordinary workers are facing.”
“I believe that there shall be a substantial increase in the minimum wage for our workers to cope… with rising cost of living,
especially [the increase in prices of] basic commodities that affect the take-home pay of lowly employees,” Paras said.
An alliance of labor organizations welcomed Bello’s order, saying it was the right thing to do.
“We have received notices from the wage board. With this order, we have issued a memorandum to all our labor representatives in the wage boards to help them adjust the wage rates,” Associated Labor Unions-Trade Union Congress of the Philippines executive vice president Gerardo Seno said.
Trade Undersecretary for Consumer Protection Group Ruth Castelo said the department is now monitoring market prices almost daily.
“Our enforcement teams are always on the go three to four times a week. We are closely monitoring possible violators but for basic necessities and prime commodities, but they know that Department of Trade and Industry is always watching so they keep their prices within the suggested retail price,” Castelo said.
Energy Undersecretary William Fuentebella, for his part, said efforts are underway to ensure energy security as world prices of oil and petroleum products may continue to go up for the next six months.
“The Energy secretary has instructed the Philippine National Oil Co.–Exploration Corp. to talk to the country’s suppliers of oil to have a comprehensive strategy in addressing oil reserves and stockpiling,” Fuentebella said.
Industry sources said Sunday oil prices will likely go up again this week to reflect increasing world oil prices.
“Pump prices are bound to go up again by next week. Diesel should go up by about P0.30 to P0.50 per liter. Gasoline should go up by about P0.55 to P0,75 per liter,” Unioil Philippines said in a statement.
Energy department Director Rino Abad warned last week that oil prices may continue to go up in the short-term or up to six months if the ongoing global oil scenario persists.
In some retail outlets, gasoline prices reached P60 per liter while diesel reached a high of P57 per liter.
“If the recent events persist, for example, sanctions [on Iran], the ongoing economic and political crises [in Venezuela], and, of course, the objective of the Opec especially Saudi Arabia, to really achieve the $80 per barrel crude oil price, then [that] will…lead towards the increases [in] price,” Abad said.
Abad said world oil prices may also stabilize once other suppliers step in to cover the supply vacuum.
“In cases like this, other suppliers will always look for that vacuum… Depending on how fast they will react to that and supplement or complement the existing supply to cover the vacuum, then if that happens, the price will again stabilize,” he said.
Last week, the oil companies implemented a P1.60 per liter increase for gasoline, P1.15 per liter increase for diesel and P1 per liter increase for kersoene.
According to the department, year-to-date adjustments are at a net increase of P 6.70 per liter for gasoline and P7.30 per liter for diesel and P 6.85 per liter for kerosene.
Crude prices moved higher last week on concerns that US sanctions will disrupt exports from Iran, adding concerns to supply.
Iran is third major oil producer of the Organization of Petroleum Exporting Countries, having 12 percent share of the 13-members group’s total output of 32.10 million barrels per day production in 2017.
Venezuela crude production dropped to 1.5 million barrels last month, its lowest level in decades due to the country’s ongoing economic crisis, helping push up global prices. Before the crisis, it averaged a production of about 2.3 million barrels a day.
Oil firms, meanwhile, have committed to continue their fuel discounts to public utility vehicles amid the high oil prices.
“Chevron Philippines Inc., through its Caltex retail sites, provides discount lanes to public utility vehicles [PUVs] across the country up to as high as P4 per liter,” said Raissa Romina Bautista, Chevron Philippines manager for policy government and public affairs.
Abad said the department has assured the public that it will recommend the suspension of the excise tax on fuel for the second tranche of the tax reform package once world oil prices hit a three-month average of $80 per barrel.
Abad said the existing excise taxes on fuel implemented since January this year under the Tax Reform for Acceleration and Inclusion Act will stay.
“You cannot withdraw from that [first tranche]. It’s already there,” Abad said.
“What is in the law, what you have implemented, it is already there unless you amend the law,” he said.
Under the second tranche of the TRAIN which will take effect starting January 2019, an additional P2 per liter excise tax will be implemented and P0.24 per liter representing VAT, totaling P2.24 per liter for both gasoline and diesel.
Abad said this is the amount that will be suspended once the department issues the certification that the $80 per barrel threshold is breached and once the Finance department confirms the same.
He said the department will take the average world oil prices from September to end November then submit the computation in the first week of December for certification on whether prices have breached the threshold level of $80 per barrel.
The excise tax already accounts for P7 in the price of every liter of gasoline sold under the first tranche of TRAIN. The tax on diesel is at P2.50 per liter, liquefied petroleum gas at P2.50 a liter and kerosene at P3 a liter. None of this would be rolled back by a suspension, Abad said.
In the House, the chairman of the ways and means committee said he would be open to recommend suspending the excise tax on fuel products to ease the impact of the TRAIN Law.
In an interview on radio dzBB, Quirino Rep. Dakila Carlo Cua said he would be open to the suspension of some parts of the law if it would address inflation.
He cautioned, however, against a wholesale suspension of the tax law.
Magdalo Rep. Gary Alejano also called for a review of TRAIN and a suspension of the excise tax on fuel if necessary.
Senator Panfilo Lacson, on the other hand, warned of a revenue erosion once the excise tax on fuel is suspended.
“What will compensate for it?” Lacson said in an interview over radio dzBB
He said suspending the tax would be “easy and popular” but asked where the government would make up the losses. He added that any such measures must be carefully studied first.
Senator Aquilino Pimentel III said it is the Finance department that should initiate moves to suspend the excise tax.
Senate President Pro Tempore Ralph Recto, on the other hand, called on the department to create implementing rules and regulations to suspend the excise tax in the succeeding tranches of TRAIN.