Business leader on P100 wage hike: Bad for economy

CEBU, Philippines — The Senate may have good intentions in proposing for a P100 across-the-board increase in the daily minimum wage for private sector workers, but it would bring down the country’s economy.

This is what Cebu Chamber of Commerce and Industries’ president Charles Kenneth Co predicted about the proposal, saying its benefit would just be short-lived and that the resulting negative effects would affect the most the marginalized sector that the Senate is trying to protect.

“Unprecedented gyud ni siya. Wa man gyud na mahitabo before nga ang Senate nay nimando og wage increase. Usually, our wage increase (decision making) goes to the Regional Tripartite Wages and Productivity Board (RTWPB), which had been established by our government also as a means to evaluate unsay just nga i-implement every year,” Co said during the latest episode of The Freeman’s Hot Seat with news editor Fred Languido.

The RTWB is composed of two labor representatives, two private sector representatives, and another two from the government (usually from the National Economic and Development Authority and the Department of Trade and Industry), all of whom Co said are “not pro-management or pro-business.’

“This mechanism, for me, is working. It just happened nga nagka-hyper-inflation 'ta the last few years. But that’s not a problem. It’s not because tungod the wage board is not effective. It’s because of inflationary problems…. So dili na siya dapat ipasa sa wage board ang problema sa inflation,” he said.

According to Senate Bill No. 2534, or the proposed Wage Increase Act of 2023 sponsored by Senate President Juan Miguel F. Zubiri, the additional P100 would ensure a “living wage” for the Filipino workforce.

Last Wednesday, the Senate approved the bill on second reading and is expected to approve it on its third and final reading next week.

After the third approval, the House of Representatives also need to approve the bill before its transmittal to the president for his signature.

Co said he hoped that the side of the business sector would also be heard. He said they already submitted their position paper to the Philippine Chamber of Commerce and Industry in Manila, with the hope that it would reach the Senate.

“This is playing with people’s emotions, livelihood sa mga tawo. This has a devastating effect on people, especially those who would have to lose their jobs out of their (senators) good intentions,” he said.

Co said the proposal is just passing on the burden to the private sector, which may just result in businesses closing down or not hiring as many employees as they can.

“In the past few years, if your notice and atong wage increase…as mandated sa RTWPB here in the Visayas, ranges from about P30 to P40, which has been pretty much in…the past few years, has had a good impact also on the businesses and their employees. You’ve seen businesses continue to expand even with this recess,” he said.

“So, we need to find a balance between growth and kaning atong livelihood, compensation,” Co said.

He said there should be safety nets in place while saying that there are other ways to improve the living conditions of the workers.

“I understand where the good senators are coming from—they want to alleviate the burden from a lot of workers. Every one of us has been suffering from the high cost of commodities, inflation. And I think they have good intentions. But even with good intentions, there could be unforeseen side effects,” Co said.

He said that the one that would be affected the most right away in the business sector are the small and medium enterprises (SMEs), which is “about 90 percent” of the whole sector in Cebu.

He said that if ever the SMEs would decide to continue doing business, he feared that they would go “underground” with their workers’ pay, which he does not want to happen.

He argued that when talking about the P100 daily wage increase, one also has to consider the overtime and holiday pay and the 13th month bonus plus the other benefits, including that for Pag-IBIG and the Social Security System.

“I hope senators and other leaders can also explore other ways. This one-time increase of P100 is not the only way. There are other possibilities, ways how they can help. Like the 4Ps that has been going on and that has been a big help also to the marginalized sector,” Co said.

He also argued that raising the minimum wage by P100 would make entrepreneurs think twice in opening businesses.

“What we’re afraid of is it will also translate to inflation again and so it will be a never-ending cycle,” Co said.

“If you mandate the increase, out of good intentions, at the end, mosaka ang cost of goods. Ang imong gi-increase, makaon ra pud sa increase. In most modern economies, gibantayan nila’g maayo ang inflation, even wage is part of the computation…. So, if you have an increase in wages without increasing productivity, that’s inflationary,” he added.

“There are workers that are not in the formal economy, we call it informal…, like kaning nanindas Carbon, nagtud og kariton, other people nga dili sweldado. Unsa may makatabang ana nila if this inflation becomes a vicious cycle?” he further said.

Co urged our political leaders to be more sensible “kay there are laws of economics that we cannot mandate.”

He also said that while getting an increase is a motivation for workers, it needs to be complimented with training and management expertise.

“It needs a holistic system to increase productivity kay wage alone is not the only thing that improves productivity. We need better equipment, better training, etcetera,” Co said.

“In this day and age, the cost of living for a family…you need the husband and wife to be to be both working. Very few na lang, luxury na nga usa lang ka breadwinner. That’s why, maybe also difficult for some families. We also need the help of the government nga naay take care system so that both (parents) can earn a living,” he also said.

More than that, though, he said, what is needed as safety nets are “education and nutrition”.

“Education and nutrition are very important when we think long term…. I always pity kaning mga tawo, street children, who supposedly should be in school…. I don’t see it abroad. We should have this mentally, that education is important. Once you train our people, our youth to be literate and have skills, they would land jobs, they would not end up that you are paying the minimum wage,” Co said.

He also said that the P100 increase is just a short-term solution to the situation.

“Short term…. Once you get P100 (more), you will be getting an extra P3,000 per month, one time.  You can do a lot with P3,000. But then the question would be, ‘Would your P3,000 buy the same things in the next few months?’ What about the people who do not have the opportunity to work off the high cost?” he said.

Co said the business sector is not avoiding giving workers decent wages. It is just looking at sustainability.

“Businesses need to survive so that the workers will have employment opportunities. Otherwise, if it would be too costly to continue doing business. The easiest decision is to…as I’ve said, matulog na lang tas ato. We don’t want that. We want our economy to continue to be dynamic and vibrant, with everyone having a good opportunity at their own livelihoods,” he said. (CEBU NEWS)