ECOP warns against wage increase at present time

The Employers Confederation of the Philippines (ECOP) warned yesterday that increasing wages at this time would discourage buyers of the country’s export products from buying Philippine-made goods.

According to ECOP president Rene Y. Soriano, the minimum wage stands at about $4.95 today or close to the Malaysian wage level of $4.25 to $9.13 and higher than the Thai level of $3.39 to $4.28.

The Philippine and Malaysian wage levels, he said, are not comparable because Malaysia is a labor-short country and has a small unemployment rate.

The Philippines has a labor surplus; in January 2004, government data cited an unemployment rate of 11.4 percent equivalent to four million jobless Filipinos.

"Productivity levels are not even neck-and-neck," Soriano said. The average productivity level of a Filipino worker was $734 between 1997 and 2002; Malaysian, $5,717; Thai, $2,184.

He warned that a wage increase that is not based on productivity will drive prices up and would worsen unemployment.

"How can you adjust wages when the Chinese worker gets paid between 31 US cents and $1.28 for garments of comparable quality?" Soriano asked. "Raise the wages now and the backlash will be on the workers. If local companies can’t cope any more, they could be forced to lay off workers or replace labor with machines."

The impact of wage adjustments on global competitiveness is a top issue to be discussed by employers participating in the 25th National Conference of ECOP on April 21 to 22 at the Westin Philippine Plaza Hotel.

President Arroyo, guest of honor and main speaker, will receive resolutions drafted by conference participants on the closing day.

The timing for a wage adjustment is not even right, Soriano said while suggesting that high level of uncertainties in the political and market environment be played out.

"Companies know the prevailing situation but can’t exactly foretell how the operating environment ahead looks like," Soriano said, adding that "Management is interested to know how the policies of the electoral victors would look like first."

As for the market environment, it is no longer enough to produce the best quality product at the lowest cost, he said.

"Companies also have to live with consumers who today have so many choices and alternatives, and whose tastes and preferences can change in a matter of days," Soriano said.

"We need a social partnership among labor, management and government," he said, "to shape an operating climate in which workers and companies can increase productivity and prosper, let alone survive. For the moment, our mindset should be job creation and job preservation. Or unemployment could become severe to handle."