Legislated wage hike to boost ranks of informal sector — PCCI

The informal sector, or those who have low-paying or unstable jobs, will further swell with the passage of the planned P125 legislated across-the-board wage hike, a top business leader said.

"The informal sector will grow bigger," Philippine Chamber of Commerce and Industry (PCCI) president Sergio Ortiz Luis Jr. said in an interview.

He pointed out that the increase in salaries will force industries to cut costs by downsizing or worse, close the business altogether. This, he said, will in turn translate to more people losing their jobs.

Socioeconomic Planning Secretary and Director General of the National Economic and Development Authority (NEDA) Romulo L. Neri has already said the P125 legislated wage hike would lead to a loss of over a million jobs.

"The legislated wage hike is not the solution," Neri stressed.

The House of Representatives has passed a bill proposing a P125 daily wage hike, to be given in three installments of P45, P40 and P40. Pending in the Senate is a counterpart bill proposing a one-time increase of P100.

Also, he explained that studies made by the government’s economic team showed that the P100 one-time hike would displace a million people already in the work force, thereby increasing the unemployment rate.

The three-tranche P125 wage hike, meanwhile, will translate to more job losses. "It creates similar damage but spreads it out over the years," Neri explained.

He criticized the national minimum wage as a one-size-fits-all solution. Some companies may be able to afford the official minimum wage while others may be forced to cut down on the number of employees, he stressed.

"Some firms can afford only a P20 wage hike, others P50, and others even P100. It depends on the state of the company. But neither Congress nor the Executive Branch has such detailed information at the firm level," he argued.