The Senate Committee on Labor has already approved in principle the Across-the-Board Wage Increase Act, Senate President Juan Miguel Zubiri said Wednesday.
Zubiri also said a Technical Working Group will discuss a proposed graduated wage increase scheme for local micro, small and medium enterprises (MSMEs), which make up over 90 percent of businesses in the country.
“We expect that the Committee Report will come out in about two weeks, and we hope to pass the bill before we adjourn in June,” said Zubiri.
However, employers are concerned the proposed bill, which would increase workers’ wages by another P150 per day, will only serve to widen the salary disparity between formal and informal sector workers.
The Employers Confederation of the Philippines, the biggest group of employers in the country, said only big businesses and a few medium enterprises can manage to comply with the proposed act.
“While we have faith in Senator Zubiri, we are wondering if he has ever consulted with the right government agencies and the employers (for data) to back up his bill. One big issue here is that only 16 percent of 50 million workers may benefit from the proposed wage hike,” said ECOP president Sergio Ortiz-Luis.
He noted that ECOP members are mostly small and medium enterprises. Micro enterprises, comprising about 90 percent of Philippine businesses, are not ECOP members.
“SMEs and the big companies have all the assistance they need. But how about the farmers, vendors, fishermen, tricycle drivers and other self-employed workers? How will this bill help the informal workers?” he added.
Ortiz-Luis said micro employers do not have the capability to generate the monthly wage augmentation even if they have less than 10 workers, which is like “squeezing water out of rocks.”
But the Senate President stressed that the last legislated minimum wage increase was in 1989, at Php89, before the passage of the Republic Act 6727, which created the Regional Wage Boards.
The wage boards also took too long to act on inflation and often approved wage hikes of between P5 to P16 only, Zubiri added.
To allay fears that a wage hike increase would drive foreign investments away, he laid out minimum wage figures in the Southeast Asian region, citing that Indonesia’s minimum wage is equivalent to P842 a day, Malaysia’s is P854 a day, and Singapore’s is Php2,486 a day.
Only Vietnam has a lower minimum wage, equivalent to P511 a day, but Zubiri emphasized that their cost of living, under the Communist Party of Vietnam, is more affordable compared to the Philippines.
Workers there do not have mandated salary deductions such as Social Security, PhilHealth, and Pag-IBIG or housing contributions, which left Filipino workers with a daily take-home pay of P525 in Metro Manila on average, the Senate chief added.
“Meanwhile, in Northern Mindanao, the minimum wage is at P390 for non-agricultural, and Php378 for agricultural (workers),” said Zubiri, a native of Bukidnon in the southern region.
In the Bangsamoro Autonomous Region in Muslim Mindanao, which has the lowest wages in the country, it is at P316 for non-agricultural, and P306 for agricultural workers
On the other hand, ECOP said it will be another shot to the moon if the government decides to support informal workers and may need trillions of pesos to grant and sustain the P150 wage hike, an amount that is not feasible at the moment given the budgetary constraints.
Ortiz-Luis stressed that half of PH micro enterprises had closed shop during the pandemic and many have not yet recovered. The bill, he said, will put pressure on micro industries to retrench some of their workers just to comply with the wage bill.
This may result in a spike to the unemployment rate in the country which, according to reports, has gone down to 4.7 percent in March 2023, he said.
Ortiz-Luis also refuted the notion that the Philippine minimum wage is low compared to other countries in the region.
“This is absolutely incorrect. In fact, we are one of the highest in ASEAN, next to Malaysia,” he said.
The ECOP chief cited the National Wages and Productivity Commission, which said the Philippines average monthly wage ranges from $284.48 to $304.23, the second highest in the ASEAN next to Malaysia’s $334.94.
However, the business group has said the Philippines’s minimum wage of P570 daily is not enough to provide for the daily expenses of a family of five.