There’s a reason for the existence of the regional tripartite wages and productivity boards. With all stakeholders consulted on the wage and job demand situation through these boards, and with all local elements considered, there’s a better chance that any wage adjustment will be properly enforced.
The regional tripartite boards were created by law. Yet legislators keep trying to brush aside the law and poke their noses into wage-setting, surely adding to the reasons why investors avoid the Philippines.
This week the Senate is reportedly set to approve a legislated P100 across-the-board wage increase nationwide, as embodied in a bill sponsored by Sen. Jinggoy Estrada. It’s not the first time that senators led by Juan Miguel Zubiri have insisted on legislating a wage increase. He had previously said he simply wanted to speed up wage hikes across the country. But who can say if such proposals from the Senate are nothing but idle talk or will be seriously pursued? Merely hearing senators discuss approval of a legislated wage hike can turn off prospective investors or discourage business expansion plans.
As expected, the Employers Confederation of the Philippines is against the proposal. ECOP president Sergio Ortiz-Luis Jr. warned over the weekend that the planned legislated wake hike would hurt micro and small businesses, which make up more than 90 percent of enterprises nationwide. Such enterprises will either lay off workers or shut down if they can’t comply with the legislated wage increase.
Ortiz-Luis also noted that pay hikes are passed on to consumers. He estimates that the proposed wage hike will fuel inflation by an estimated two percent just as the increase in the consumer price index is starting to ease. Higher prices in turn will hurt the poorest segments who are non-wage earners, among them farmers and marginal fishers, as well as market vendors and others in the informal sector that account for 84 percent of the labor force.
The country already has one of the highest wage rates in the region, Ortiz-Luis pointed out. Seeing lawmakers wanting to dip their hands into wage-setting illustrates how erratic business policies are in the Philippines, which is one of the reasons why investors avoid the country. Even a full rewriting of the Constitution will not cure this.
A mechanism has long been in place, designed by law to set wages based on economic realities on the ground, and not just to satisfy populist pandering by politicians. That mechanism must be shielded from politics and allowed to work.