THE Regional Tripartite Wages and Productivity Board has approved a P15 daily wage increase for minimum wage earners in Metro Manila, the Labor department announced on Wednesday.
From P466, a daily wage earner in the private sector would be mandated by law to earn P481 starting April 15 or 15 days after a copy of the wage order is published.
Labor Secretary Rosalinda Dimapilis-Baldoz, who also heads the National Wages and Productivity Commission, said the new pay raise would benefit over half-a-million minimum wage earners in Metro Manila or National capital region (NCR).
This is the 19th such increase in minimum wage since Republic Act 6727, or The Wage Rationalization Act, became a law on June 9, 1989, and the fifth such minimum wage pay hike under the administration of President Benigno Aquino 3rd.
Prior to the new wage order, the NCR Wage Board had received two petitions for an across-the-board daily wage increase.
The first petition was filed by the Association of Minimum Wage Earners and Advocates last November 28 seeking a P146.80 across-the-board daily wage increase, while the second petition was filed by the Trade Union Congress of the Philippines (TUCP) on March 6 that sought a P136 across- the-board daily wage raise.
The Wage Board conducted three public consultations with the labor sector (January 29), with employers (February 10) and with the government sector (February 17). It also conducted a public hearing on March 6.
“Unfortunately, the [Wage Board] is not mandated to set across-the-board wage increases. Our mandate is to set minimum wages,” it said.
In its petition for a P136 increase, the TUCP said the real value of the peso has been eroded by 35 percent because of a variety of inflationary factors, including consumer price index, tuition light-rail fare hike and the impending water and electricity rate increases.
“The real value of the current P466 minimum wage is P299 only. It cannot sustain the needs of a family. As a result, many employed workers fall through the cracks and join the growing ranks of the working poor. Thus, we are asking the board to give a living minimum wage. We particularly appeal to employers to grant our petition,” TUCP spokesman Alan Tanjusay said.
Malacañang defended the wage increase amid criticisms that the amount was still not enough for workers and their families to live decently.
Palace deputy spokesman Abigail Valte said the amount was reached after consultations were held. According to her, the interests of workers were balanced with those of employers.
“Traditionally, if you look at the positions of labor groups vis-à-vis employers groups when it comes to a wage hike, they’ve never been on the same plane or at least on the same level. The job of the Wage Board is to determine what can be given that will also not be detrimental to employers. Meaning, if you give too high, this is one of the considerations of Wage Board and they tell you as much, that if you give too high an increase, the employers will not be able to absorb it,” Valte told reporters in a news briefing.
“So they also check what amount can be a good compromise between requests of labor groups as well as employers. That brings the total wage in NCR to P481, if I am not mistaken, and it’s good still. Some will call it not enough or not sufficient but it’s still something to be given, something in addition to what they are already getting. I believe it will be implemented in April, if I’m not mistaken,” she said.
The TUCP said workers have not been granted a real wage increase since 1989.
“What we have now is a tale of two Philippines, the story of how the upper 20 percent or the privileged few benefit from economic development and the story of the workers who toil everyday just to afford food if they are lucky enough to have regular jobs,” it added.
The TUCP said it was not asking for lavish increase but only a modest share from gains of the booming economy, which, it noted, are only enjoyed by a few rich families.
It added that the P136 across-the-board and region-wide daily increase was essential for workers to cope with increasing prices of commodities and cost of living, and meet the basic needs of the workers’ families even if only partly.
Labor Director for NCR Alex Avila, who heads the NCR Wage Board, said they took into consideration several factors, including erosion in the minimum wage; inflation rate; possible impact of the minimum wage adjustment on prices of goods and services, as well as on employment; movements in the consumer price index; current economic condition in the region; employers’ ability to pay; and results of continuing studies, sectoral consultations and public hearings.
“The decision of the [NCR Wage Board] to adjust the minimum wage was consistent with the government’s policy of granting regular, moderate and predictable minimum wage adjustments, taking into consideration the needs of workers and their families, as well as the need to maintain stability in the business environment within the framework of the two-tiered wage system reform which Secretary Baldoz has initiated in 2012 and which we accelerate to implement,” Avila added.
He said the P15 increase in the minimum wage will directly benefit 587,000 minimum wage earners who also would continue to be exempted from paying income tax on their wage and on their hazard pay, holiday pay, night shift differential and overtime pay.
“The take-home pay of our minimum wage earners will increase to P492.57 per day, or by 3.2 percent because of the wage hike, compared to the current P477.03 per day. They will also enjoy a higher 13th month pay and increased social security coverage,” Avila added.
“On the part of the employers, their effective labor cost per employee working six days a week will also increase by 3.2 percent, or P565.54 per day, compared to the current P547.87 per day,” he said.
Avila expressed confidence that like in the past year, employers will be able to bear the cost of the increase without hampering their viability for growth and expansion and, therefore, their ability to sustain employment creation.
“In January 2014, when the second tranche of the minimum wage increase consisting of the integration into the basic minimum wage of the P15 of a P30 COLA [cost of living allowance]granted by the RTWPB [Regional Tripartite Wage Productivity Board]-NCR in October 2013 took effect, employment was at 88 percent, unemployment was at 11.2 percent, and underemployment was at 12.1 percent. Today, employment in the NCR is at 90.7 percent, unemployment is at 9.3 percent and underemployment is at only 8.3 percent. So, we see that this significant improvements in these economic indicators will not be affected by the new minimum wage order, but instead continue until the end of the year and beyond, barring any glitches in the horizon,” he explained.
Avila said with the increase, the Wage Board was able to maintain the near-to-the ideal ratio of the minimum wage to average wage, which is 40 to 70 percent, at 75 percent, down from 80 percent when the Aquino administration came to office in 2010.
“The applicable minimum wage-to-average wage ratio for the country is not too close, to allow for bipartite approaches and flexibility in plant-level negotiations for further benefits,” he added.
In this latest minimum wage pay hike, Avila pointed to another bright note: removal from the list of establishments that may apply for exemption from the wage order, in accordance with rules and regulations and following compliance with documentation and other requirements, of establishments whose total assets—including those arising from loans, but exclusive of the land on which the establishments’ offices, plants and equipment are located—are not more than P3 million.
“They are no longer included in the list of establishments that may apply for one year exemption. Only distressed establishments, retail/service establishments regularly employing not more than 10 workers; and establishments adversely affected by natural calamities may apply for exemption and as determined by the Wage Board,” he said.