Employers buck legislated wage hike

MANILA, Philippines – Employers expressed willingness yesterday to increase wages but rejected proposals for a legislated wage hike.

The Employers Confederation of the Philippines (ECOP) insisted that a legislated wage increase would do more harm than good to the majority of low-income workers who could be laid off by small companies that cannot absorb a new salary hike.

“Let us not court disaster. A legislated wage increase would do more  harm than good considering that 84 percent of the country’s workforce will not benefit from this and will create disparity in incomes,” ECOP president Sergio Ortiz-Luiz Jr. said.

Ortiz-Luiz said a legislated salary hike would only hamper operations of the companies, particularly small and medium enterprises which comprise 99 percent of business establishments nationwide.

“If lawmakers will proceed in giving in to populist demands for legislated wage hike, many businesses will have no choice but to trim down their workforce since a pay adjustment coupled with surging fuel prices will impact on business vitality,” Ortiz-Luiz pointed out.

He said employers are not against a salary increase that should be resolved by the Regional Tripartite Wages and Productivity Boards (RTWPBs) as mandated by law.

“The wage boards are mandated by law to take into account certain factors and criteria to determine the magnitude of a wage increase which would be fair to stakeholders in the workplace,” Ortiz-Luiz explained.

Instead of riding on the wage issue, Ortiz-Luiz urged legislators to focus on setting up a safety net or tax exemption for minimum wage earners and also pass measures to improve food production.

Speaker Prospero Nograles joined other congressmen who are in favor of another salary increase and tax relief for minimum wage earners.

He supported the proposal to increase the tax exemptions of ordinary workers, which he would endorse to the House Ways and Means committee when Congress resumes session next week.

“The proposal to reduce the taxable income of fixed-income workers through an increase in the level of personal exemptions would increase the buying power of millions of Filipino families,” he said.

Rep. Florencio Noel of the party-list group An Waray and Aurora Rep. Juan Edgardo Angara also supported the proposal for higher tax exemptions.

“It will benefit a larger number of workers than a measure that will simply exempt minimum wage earners from income tax. This will apply to all employees, while at the same time sparing those receiving minimum pay from income tax,” Noel said.

Angara said it’s time that workers, who have been contributing the bulk of value added tax collections, received a tax relief.

Sen. Francis Escudero, chairman of the Senate Ways and Means committee, is not inclined to support higher tax exemptions for all workers.

Escudero favor a tax relief only to minimum wage earners to minimize the loss of revenue for the government.

Manila Rep. Bienvenido Abante Jr. recommended that Congress should increase sin taxes to enable the government to recover revenues lost from higher tax exemptions for workers.

“Let us act on my bill seeking to increase taxes on the so-called sin products like liquor and cigarettes. Higher sin taxes in exchange for higher exemptions for our workers,” Abante said.

Valenzuela City Rep. Magtanggol Gunigundo II said the emerging consensus in the House is to increase the amount of combined tax-free income of working couples from P96,000 to P150,000 a year or from P8,000 to P12,500 a month.

He said the rates assume that both spouses are working and have four dependents, since each spouse is presently entitled to a personal exemption of P32,000 or P64,000 for both of them, and P8,000 for each dependent or P32,000 for four dependents.

Gunigundo said the total exemptions will reach P96,000 which is their tax-free income. Beyond that amount, they have to pay tax.

He said a minimum wage earner in Metro Manila currently receives P362 a day.

“If he (worker) works for five days a week, he earns a total of P7,240 a month. If his wife is also a daily wage earner, they have a combined monthly income of P14,480. They will still have to pay tax of nearly P2,000 if the proposed P12,500-a month tax-free income is approved,” Gunigundo said.  With Jess Diaz