ECOP urges Senate to junk bill ordering P125/day wage hike

The Employers Confederation of the Philippines (ECOP) urged the Senate yesterday to junk the House-approved bill mandating a P125 per day across-the-board wage increase over a three-year period and adopt a "hands off policy" on the wage issue.

Newly-elected ECOP president Sergio Ortiz-Luis Jr. ruled out any compromise on a legislated wage hike, especially at this time when the economy is reeling from fierce global competition and harsh domestic challenges.

According to Ortiz-Luis, "an across-the-board legislated wage increase undermines the viability of most enterprises in the country, particularly the small and medium enterprises (SMEs) that are providing jobs and livelihood to millions of Filipinos."

Ortiz-Luis argued that the P125 across-the-board legislated wage hike would accelerate the decimation of hundreds of thousands of micro establishments and the SMEs in the formal sector.

The loss of jobs, Ortiz-Luis said, would run counter to the flagship program of the Arroyo administration to promote and strengthen micro enterprises and SMEs as key generators of employment and economic dynamism in the value supply chain.

Ortiz-Luis bewailed that "moves to legislate a pay adjustment reflects the prevailing highly-populist orientation to continue increasing the benefits of the employed wage and salary workers in the formal sector in complete disregard of the stark realities of the Philippine labor market characterized by increasing chronic unemployment and underemployment, shrinking formal sector and an expanding informal sector."

He cited that from 1999 to 2003, employment in the formal sector dropped by 307,228 while employment in the formal sector expanded by nearly 2,000,000.

The informal sector includes wage and salary workers in family-based or unregistered economic units, industrial homeworkers, the self-employed, and the unpaid family workers.

The employment of most of these workers are unsecured and they are vulnerable in as much as they move form one situation to the other.

"These should be cause for concern for policy-makers, as this pattern is inconsistent with the progressive increase of the labor force, employment, and of economic growth," Ortiz-Luis warned.

ECOP chairman Miguel B. Varela added that the effort of the business community to keep the economy afloat would be put to naught due to the adverse implications of the wage hike bill.

He also noted the astronomical costs of its full implementation, which would cost up to P1.2 trillion based on the total number of workers (12,262,000) in private establishments as of end-2005. Ortiz-Luis warned that should lawmakers insist on a legislated wage increase, "more and more businesses would have no choice but to go underground."