Businessmen oppose P125 wage increase

MANILA, Philippines - The business community cautioned Congress yesterday against the “disastrous” effects of granting a legislated wage increase for all workers nationwide.

The Employers Confederation of the Philippines (ECOP) said that rather than bring benefits, the proposed P125 across-the-board legislated wage increase could result in more suffering for workers.

ECOP pointed out that a mandatory increase in daily wages would only force many companies nationwide to close shop.

“With this massive across-the-board daily wage increase which is not productivity-based, cost of production of goods and services would rocket sky-high. Enterprises could not just simply pass on the increased cost of goods to the market primarily because of the competition offered by low-cost imports and smuggled goods,” ECOP said in a stament.

“In the process, companies which are unable to recover the increased cost of production would have no other choice but either to retrench or worse, close shop, or simply go underground, rather than risk severe penal sanctions,” ECOP added.

According to ECOP, the biggest casualty of a legislated wage hike would be micro and small establishments that comprise the majority of firms in the country.

“Latest data available indicate that micro and small establishments employ 3,596,110 wage and salary workers or 63 percent of the total number of 5,691,110 wage employment in the formal sector,” ECOP disclosed.

From the Asian financial crisis in 1991 up to 2009, micro and small and medium enterprises (SMEs) lost more than 46,000 enterprises and over 558,000 jobs.

“Unquestionably, micro and small establishments will be the first ones to fall, considering that most of them could even barely cope with the periodic wage increases granted by the regional wage boards,” ECOP pointed out.

ECOP further noted that the proposed legislated pay adjustment would undermine unionism and collective bargaining.

It cited that the P125 across-the-board daily wage increase is equivalent to 31 percent of the highest prevailing regional minimum wage of P404 a day.

“This would also render the functions of the regional wage boards inutile as the various wage boards are mandated under Republic Act 6727, otherwise known as the Wage Rationalization Act, to set wages per region, sector or industry,” ECOP stressed.

ECOP said a legislated wage increase would also aggravate the discrimination and inequity between the protected sector and the rest of the labor force in as much as only 15 percent of wage and salary workers in the formal sector stand to benefit from it.