Foreign chambers weigh in ahead of NCR wage hearing

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The umbrella group of foreign firms operating in the country has warned anew that raising the daily minimum wage of private sector workers now will benefit only a few of them and could force small businesses -- which comprise bulk of the business sector -- to retrench or close shop altogether.


On the whole, a wage hike right now is expected to benefit only a few workers and stoke inflation that will adversely affect much of the country’s work force. -- Jonathan L. Cellona


In an Aug. 1 letter to Alex V. Avila, chairman of the National Capital Region (NCR) Regional Tripartite Wages and Productivity Board, that was e-mailed to media yesterday, the Joint Foreign Chambers of the Philippines (JFC) reiterated support for the two-tiered wage system the government rolled out last year that consists of a hike in minimum wage for those earning below the prescribed floor level and productivity pay for those getting amounts above it.

“We, the Joint Foreign Chambers of the Philippines, support fair and competitive wages for the Filipino work force,” read the letter, which was signed by the leaders of seven business groups.

“Wages must be fair in the sense that workers in both the formal and informal sector must be rewarded with just wages for their value contribution to the economy,” JFC said.

“Wages must remain competitive in the sense that wage levels must not result in job loss, as investors avoid the Philippines in favor of other countries with lower labor costs and local markets sell more imported than locally made products.”

The group said its member companies “generally pay above the minimum wage level for new hires,” who tend to be college graduates with skills that enable them to perform higher-quality jobs “particularly in information and communication technology-enabled services and manufacturing sectors of the economy.”

Noting petitions for P83- and P85-a-day increase in NCR daily minimum wage filed by two factions of the Trade Union Congress of the Philippines, which will be the subject of a public hearing tomorrow, JFC warned: “We believe such measures will have unintended adverse consequences that, in the long run, can adversely affect the very sector they wish to benefit.”

NCR’s current minimum wage, which took effect on June 3 last year, is P456 for non-agriculture workers and P419 for all others, inclusive of a P30 cost of living allowance (CoLA).

Specifically, JFC warned that “a wage increase at this time”: could force businesses -- especially micro, small and medium enterprises (MSMEs) which make up 99.6% of registered businesses in the country -- to pass on the cost to consumers, which the group said “will fuel inflation,” and even lay off workers as these ventures “streamline operations in order to survive...”; will “imperil increased interest in the country as an investment destination,” noting that Metro Manila’s $10.74-per-day minimum wage compares with Myanmar’s $0.52, Cambodia’s $2.03, Vietnam’s $3.15, Indonesia’s $7.46, as well as Thailand’s and Malaysia’s $9.75; will benefit just 5.8% of the country’s total work force, while its inflationary impact will adversely affect 94% of workers; and is not warranted by the extent of erosion of the peso’s value, since the latest daily minimum wage increase -- including CoLA -- totaling P52 has been “more than enough to cover inflation for the last two years from May 2011 to May 2013”; moreover, average inflation rate this year which could fall below the lower 3% end of the central bank’s target range “does not warrant any additional adjustment in the minimum wage and CoLA at this time.”

“The real problem in the labor sector is unemployment and underemployment -- a total of over three million unemployed and some 12 million underemployed,” JFC noted in its letter.

“The key to improving the plight of our workers is to increase their employability and competitiveness,” it added.

“We believe that, ultimately, compensation should be tied to productivity, as determined by enterprise-level conditions. Wages should not be political in nature, legislated and without regard for the nuances of the industries and individual enterprises...” the group said.

“Due to the foregoing reasons, JFC is not in favor of any adjustment in the current level of the minimum wage in the National Capital Region.”

The letter was signed by leaders of the American Chamber of Commerce of the Philippines, Inc.; Australian-New Zealand Chamber of Commerce of the Philippines, Inc.; Canadian Chamber of Commerce of the Philippines, Inc.; European Chamber of Commerce of the Philippines, Inc.; Japanese Chamber of Commerce & Industry of the Philippines, Inc.; Korean Chamber of Commerce of the Philippines, Inc.; and the Philippine Association of Multinational Companies Regional Headquarters, Inc.

Besides NCR, which provides the benchmark for adjustments nationwide, three other regions have pending petitions for increases in daily minimum wage, namely: Calabarzon (P79.50), Davao (P80) and Western Visayas (P113.57 for commercial and industrial workers as well as P96.35 and P100.45 for two classes of plantation workers).

NCR wage board officials were not immediately available for comment on foreign business groups’ concerns. (Business World Online)