Metro workers seek P90 wage hike

MANILA, Philippines - The country’s largest labor group yesterday sought a wage increase of P90 for workers in Metro Manila to help them cope with the rising cost of essential commodities.

However, the Employers Confederation of the Philippines (ECOP) wants the government to carefully study the wage hike petition, saying the capability of employers to finance the increase should be considered.

In a four-page petition filed with the Regional Tripartite Wages and Productivity Board (RTWPB), the Trade Union Congress of the Philippines (TUCP) said workers’ purchasing power has been reduced by half and they are now in dire need of a salary increase.

“As of December 2011, the purchasing power of the latest P426 daily minimum is P248.40, or an erosion of 41.69 percent,” TUCP president Democrito Mendoza said.

Mendoza noted that since the last wage hike was granted nine months ago, there have been continuing increases in the prices of gasoline, cooking gas, electricity and other services.

“The increase in prices of essential commodities constitute supervening condition that should require the RTWPB to grant another round of salary hike,” he said.

Based on government data, the Consumer Price Index (CPI) or the average prices of goods and services consumed by a typical Filipino family rose from 121.4 to 122.9 – equivalent to P5.28.

“The P5.28 must be added to the current minimum wage aside from the projected nine percent increase in CPI as a result of the further price increases of oil, LPG, automatic price adjustments in electricity in the months ahead,” Mendoza explained.

“The wage board therefore should also decide to add another P38.34 to the current minimum pay as well as the P2 per day share of the growth in Gross Regional Domestic Product (GRDP) for the past 23 years since 1989 as equity supplement which is equivalent to P46,” he added.

Mendoza said the RTWPB should grant an overall P90 increase in the daily basic pay of workers to push up the purchasing power to P516 from the current P303.

He stressed that the eroding purchasing power of the peso made the workers and their families vulnerable in the past years.

Last year, TUCP petitioned the wage board for an additional P75 in the minimum basic pay of workers in NCR. However, the board gave only P22 adjustment in the form of emergency Cost of Living Allowance (COLA).

Supervening conditions

The other day, the TUCP said workers must be able to establish that supervening conditions exist in Metro Manila to prompt the board to take action on the wage petition.

National Wages and Productivity Commission (NWPC) executive director Ciriaco Lagunzad said the board is prohibited from granting successive wage hikes within a year unless there is a supervening condition or excessive and sustained hike in prices of essential commodities and services.

Lagunzad said the board shall also consider the employers’ capability to grant a salary hike aside from the need of workers for wage adjustments.

NWPC deputy executive director Patricia Hornilla said a supervening condition is defined as abrupt and sustained increase in prices of petroleum products and other basic services.

Hornilla also stressed that the wage board needs to determine the existence of a supervening condition in a region under their jurisdiction and must be confirmed by the NWPC.

According to Hornilla, the different wage boards declared supervening conditions and granted salary increases within a year only in five instances since 1990.

“Supervening conditions were declared in 1990-1991 due to the Gulf war, then in 2005, 2008 and 2011 and in all these, oil price was the triggering mechanism because other products increase their prices after the oil price hike,” Hornilla pointed out.

However, Lagunzad said, oil price is not the only factor being considered in granting a salary hike for minimum wage earners.

“Most of the time, the wage boards respond to the clamor for salary hike with or without formal petition, but they also have to take into consideration other factors that affect the operations of the business establishments and the capacity of employers to grant salary increase,” Lagunzad stressed.

Although prices of petroleum products rose 11 times since January, Lagunzad said the inflation rate remained low, while the value of the peso continues to appreciate.

Untimely

In a phone interview, ECOP president Edgardo Lacson noted that TUCP’s filing of the petition for a P90 increase in the daily basic pay of workers is untimely because the NWPC cannot decide to implement a wage increase until May 26, the time when the one-year ban on wage adjustments expires.

In 2011, wages in Metro Manila were raised on May 26; Central Luzon on June 24; and Calabarzon on Jan. 15.

“This petition must be carefully studied. The capability of employers to increase pay should be considered,” Lacson said.

He said many small businesses will not be able to support the wage increase especially because under the law, diminution of salaries is prohibited.

He noted that 99 percent of enterprises in the Philippines is made up of small and medium enterprises. 

Lacson said that for now, ECOP has not yet decided on filing a counter-petition.

The Kilusang Mayo Uno (KMU), on the other hand, said they would continue staging protest actions to push for a substantial wage increase and stop the continuing oil price hikes.

“Workers have not received a significant wage increase for more than nine years under the previous administration and more than one year under the present one. The real value of workers’ wages is being further eroded by this year’s price hikes,” KMU chair Elmer Labog said.

“Without a significant wage hike, the workers’ families will continue sinking deeper into hunger and poverty. A substantial salary increase will at least provide some relief from skyrocketing prices,” he added.

Labog said they would continue to push for the passage of a measure that provides for the granting of P125 across-the-board wage increase.

“We do not believe that the country’s regional wage boards are capable of granting a significant wage hike. History has proven that these wage boards are instruments for pressing down, not increasing, workers’ wages,” he said.

The NWPC, however, said that since 1990, the board issued wage orders resulting in the increase in salary rates of minimum wage earners ranging from P143 to P248 in the different regions nationwide.

“Whenever there is an increase in minimum wage only 2 million workers out of the 40 million workers benefit from it... since most of them are in the informal sector, which is not covered by the minimum wage,” Lacson explained in a radio interview.

“But if minimum wage increase would be implemented, it would trigger inflation, which will cause the prices of basic goods to rise since they will pass it off to their consumers,” he added.

He also said most of the small and medium companies, which generate most of the country’s economic activity, will also not be able to shoulder such increase. 

Despite these reservations, Lacson said ECOP is still open to a compromise with TUCP once the tripartite consultation for the petition is initiated.

“We are open to a win-win solution but on the enterprise level and not with a ‘shotgun’ approach that will hit even those (SMEs), which will be jailed if they are not able to comply,” Lacson said.

However, TUCP spokesman Alan Tanjusay said the new wage petition is non-negotiable. 

“We could no longer seek a compromise since the day-to-day living of the workers is at stake here,” Tanjusay said.  

He also denied ECOP’s claim that the wage hike will lead to closure of some SMEs, which are incapable of paying the proposed minimum wage, since they could file for an exemption at the wage boards.

Domino effect

Meanwhile, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the wage hike being sought by TUCP could stoke up and put the inflation target of the BSP in peril.

Guinigundo said in a text message to reporters that monetary authorities used only P18 daily wage hike in its latest inflation forecast of 3.1 percent this year and 3.4 percent next year.

“Let me put it this way, we used P18 adjusted for the year. This is around five percent. Since the regional tripartite council uses the cost of living or inflation, I believe this rate of adjustment is warranted given our inflation forecast for 2012 and 2013,” he stressed.

The BSP has set an inflation target of three percent to five percent between 2011 and 2014.

Guinigundo explained that the labor sector should be able to prove that the wage hike they are seeking is consistent with productivity gains.

“The issue that should be raised is whether the proposed adjustment is consistent with productivity gains. This should be demonstrated,” he added.

Inflation eased to its lowest level in 29 months after falling to 2.7 percent in February from the revised four percent in January, giving the BSP enough room to keep its accommodative policy stance to support the country’s slackening economy.

Last March 1, the BSP’s Monetary Board slashed interest rates anew by 25 basis points, bringing policy rates back to record low levels in July 2009. The overnight borrowing rate now stands at four percent while the overnight lending rate is now at six percent.

So far, the BSP has reduced interest rates by 50 basis points for two consecutive policy-rate setting meetings this year due to manageable inflation outlook as well as slower-than-expected global economic growth.

BSP Governor Amando Tetangco Jr. earlier warned that rising oil prices pose an upside risk to the BSP’s inflation target of three percent to five percent.

“Forecast now is that price of oil will remain in elevated price level. That is an upside risk to inflation. We’ll have to consider all of these in assessing inflation outlook vis-a-vis monetary policy,” he stressed.

Based on its assessment, Tetangco said the BSP’s inflation target of three percent to five percent would be breached if the average price of Dubai crude averages between $150 per barrel to $160 per barrel.

The next policy rate setting of the BSP is scheduled on April 19.

According to him, the stance of monetary policy of the BSP remains appropriate.

The Cabinet-level Development Budget Coordination Committee (DBCC) sees the country’s gross domestic product (GDP) expanding between five percent and six percent this year from the revised 4.5 percent to 5.5 percent last year.

The country’s GDP slackened to 3.7 percent last year from 7.6 percent in 2010 due to weak global growth and underspending by the Aquino government. – With Czeriza Valencia, Lawrence Agcaoili