Exporters oppose wage hike

MANILA, Philippines - Exporters are against new petitions for a minimum wage hike and an across-the-board wage increase, noting this could result in massive job losses and lost investments.

In a letter to Regional Tripartite Wages and Productivity Board chairperson Alan Macaraya, Philexport president Sergio Ortiz-Luis Jr. warned that another round of pay hike would undermine the viability of most enterprises in the country, particularly the micro, small and medium enterprises (MSMEs).

“An upward adjustment in the minimum wage is the last thing that business, particularly struggling MSME-exporters need at this very difficult time, as it will adversely impact on their ability to sustain their operations and preserve jobs of their workers,” he said.

Citing government data, Ortiz-Luis said exports revenues posted a 12.8-percent decline in April. This was attributed to the negative growth of the main industries and sources of employment in the region such as electronic equipment and parts, metal components, electronic products and other manufactures.

MSMEs account for 25 percent of the country’s total export revenue. It is also estimated that 60 percent of all exporters are MSMEs.

Ortiz-Luis said a new wage adjustment would exacerbate the unemployment rate that increases poverty incidence in the country.

He said high wages also discourage foreign direct investments (FDIs) and labor-intensive industries such as certain handicrafts and furniture operations.

Despite the Philippine’s 9.8-percent growth to $2 billion net FDI inflows in 2012, the country still trails behind its neighbor countries like Malaysia with $9.2 billion, Indonesia with $19.5 billion and Thailand with $8.6 billion, Ortiz-Luis said.

“Hence, further increase in the cost of doing business such as minimum wage will not help attract investors, be it domestic or foreign investors,” he added.

Ortiz-Luis said any wage increase could cripple the economy and make the country even more uncompetitive vis-a-vis its Asian neighbors.

Instead of an across-the-board pay hike, the industry group support the implementation of the productivity-based wage adjustment as espoused by the two-tier wage adjustment system by the Department of Labor and Employment (DOLE).

Ortiz-Luis reasoned that industries and sectors have varying capacities to pay their workers.

“The solution on the two-tiered wage implementation comes as an appropriate measure, therefore, as this provides the flexibility for employers to adjust wages based on their financial situation vis-a-vis the performance of their workers,” he noted.

Philexport also pushed for the approval of the amendments to the Productivity Incentives Act that would help ensure the workers could share the benefits of a profitable business even as they keep their jobs.

Likewise, the group believe that the reduction by 50 percent of the value-added tax (VAT) on oil could create a positive ripple effect through the supply chain. – Philexport News and Features