Furniture industry bucks wage hike

CEBU, Philippines - The Cebu furniture makers and exporters through the Cebu Furniture Industry Foundation Inc. (CFIF) formally submitted its position paper to the Regional Tripartite Wages and Productivity Board (RTWPB) opposing the proposed across-the-board wage increase.

Signed by CFIF president Angela F. Paulin, the industry pleads for a reconsideration of the proposed wage hike, especially for the industry, saying “an increase at this time is tantamount to a death certificate for the export furniture industry.”

Any wage increase at this time, will mean another round job retrenchments, as the industry is still suffering from the lingering effects of the global economic recession.

“Cebu furniture industry is down on its knees. An across-the-board increase in minimum wage now would send the industry crashing,” the position paper said.

It emphasized that major markets for furniture which is the United States still weak, and will remain so for many years.

“No exporter can afford to increase wages until the markets have improved. At the moment, everyone is just trying to survive or break even,” reads the CFIF position paper.

The industry also mentioned another critical issue on strong competition which China,Vietnam and Indonesia that continues to threaten the survival of the furniture export industry in Cebu, or in the Philippines in general.

“Cheap furniture from China, Vietnam and Indonesia are becoming more popular among markets that are beset with uncertainty. With economic recovery still beyond their sights, international markets will try to postpone their home renovation plans. Those who do redecorate would go for low-end furniture or avoid purchase of complete furniture systems/units,” the industry reasoned. 

According to CFIF any wage increase to be implemented at this time would cause more job losses.

“The furniture industry is responsible for generating thousands of jobs, both at the level of furniture manufacturers and their subcontractors. But the crisis has caused many furniture companies to fold, resulting in a number of displaced employees. Those who have continued to operate during the crisis had to right-size or reduce work-hours just to survive. Being made to pay higher wages at a time when its finances are at an ultimate low would bring an end to a furniture company’s existence, thereby causing more job losses,” CFIF told the RTWPB through the position paper.

 In Central Visayas, total exports in 2009 fell 37 percent from 2008 levels, with the furniture sector being the hardest hit.

Aside from making furniture companies to suffer more, an across-the-board increase would provide incentives to employees who do not deserve a raise. Increase should be based on a worker’s productivity and should serve as an award to those who are committed to their jobs and continue to exert efforts to improve their skills, CFIF said.

The industry believes that if there has to be an increase in wages, it should be postponed until market recovery is certain. Individual companies should be allowed the discretion to decide when they can afford to increase the wages of their workers and, if so, how much.

“We understand that the government’s primary thrust is to provide jobs. The industry helps the government achieve this objective. Being compelled to pay for an increase it cannot afford prevents the industry from being an effective partner of government in job generation,” the industry further explained.

CFIF hopes that with the valid points it raised to prevent any implementation of across-the-board wage hike, the RTWPB will seriously consider its plea, during their deliberations.

CFIF’s membership includes about 80 percent of furniture manufacturers and exporters in Cebu and some companies in Negros Island. From 180 members in 2007, CFIF’s membership is now down to 118 due to company closures.