P40 pay hike: Gap remains wide between living, real wages | Inquirer News

P40 pay hike: Gap remains wide between living, real wages

By: - Content Researcher Writer / @inquirerdotnet
/ 10:43 AM July 06, 2023

P40 pay hike: Gap remains wide between living, real wages


MANILA, Philippines—As the six-year presidency of Rodrigo Duterte ended with a still meager wage increase, calls for a living wage grew louder as Ferdinand Marcos Jr. was set to take office as the 17th president of the Philippines.

However, a year since June 30, 2022, the day Marcos committed to bring change to make life better for all Filipinos, the disparity between living wage, or the level of pay Filipinos need to live decently, and actual wage remained wide.


RELATED STORY: As Bongbong Marcos prepares to govern, calls for ‘living wage’ grow louder

A P40 raise in minimum wage in Metro Manila was to have been good news except that many considered it “paltry.”


The insufficiency of minimum wage despite the P40 raise was pointed out by think tank Ibon Foundation, which said there was a “constant wage erosion throughout the first year of the administration.” The P40-increase, it said, is “much less than what Filipino workers need and deserve.”

But why?


Last year, the minimum wage in Metro Manila, which is already the highest in the Philippines, was raised by P33 by the Regional Tripartite Wages and Productivity Board which brought the new minimum pay to P570 from P537 per day.

READ: Wage hike in Metro Manila, W. Visayas to take effect June 4, June 5, respectively

Over a year later, the minimum wage was raised by P40, or seven percent, with the Metro Manila wage board saying that by July 16, private sector workers will already receive P610 a day.

READ: Minimum wage hiked by P40 in Metro Manila

The numbers would show, however, that this was still not enough to meet the need for a living wage.


Over the years, the government has been confronted with endless calls for wage increases, especially since inflation continued to accelerate, bringing prices of basic goods beyond the reach of millions of Filipinos.

As stressed by Ibon Foundation on Monday (July 3), millions of Filipino workers and their families are struggling with rising cost of living—the reason that it said the first wage increase of the Marcos administration was “far from enough.”



The P610 minimum wage in Metro Manila is P490 short of the P1,100 minimum wage petition of the coalition Unity for Wage Increase Now. Likewise, Ibon said the P40-increase is P140 less than the P180 pay raise sought by the Makabayan bloc in Congress.

It is P110 shy of Senate President Juan Miguel Zubiri’s P150 wage increase proposal, too, which would raise minimum pay in Metro Manila to P720 per day, though Zubiri’s proposal was P30 less than the P750 per day minimum pay being sought by Makabayan.

READ: P40 hike in Metro Manila minimum wage still not enough — senators

Based on the new wage rate, workers in the agriculture sector, service and retail establishments with 15 or fewer workers, and manufacturing establishments with fewer than 10 workers, are likewise set to receive a higher wage of P573 from P533.



While Zubiri pointed out that the wage increase is still good news, he was quick to add that it was not enough, especially considering that his proposal in Senate Bill No. 2002, or the proposed “Across-the-Board Wage Increase Act,” was already approved “in principle.”

READ: Senate panel approves ‘in principle’ P150 private sector wage hike

No savings

According to the United Nations Global Compact, an initiative based on commitments by UN members to implement socially responsible policies, “working poverty is a reality worldwide,” stressing that for millions, a job does not provide a way out of poverty.

It said a “living wage is an essential aspect of decent work to ensure workers, their families and communities can live in dignity.” It is not only an economic imperative, but also a corporate responsibility, it said.

Ibon Foundation said as of May this year, a family of five in Metro Manila needs P1,160 a day or P25,239 a month to live decently, indicating that with only P13,240, which is the 22-workday equivalent of the new wage rate, the household will be left with nothing.



The think tank provided a list of required expenses for a family of five to live decently, including those that are for food, house rent, education, clothing, health, and water, electricity and gas.

Ibon Foundation said computed with the estimated equivalent monthly rate for a five-day workweek, a year of pay, including the one for 13th month, is worth P27,342 a month, which is expected to be spent on essential needs.

This means that with only P13,240 minimum wage a month, a family of five in Metro Manila will hardly survive and will have nothing left to spare for emergency needs, like medical confinement.

Deeper problem

But a closer look would show that the insufficiency of the P40-increase is not the sole problem because in reality, millions of Filipino workers, who are engaged in informal or low-paying jobs, will not even benefit from it.

As pointed out by Ibon Foundation, informal and low-paying work have increased since June 2022 to April 2023, estimating that the magnitude of jobs in self-employment, informal establishments, and other informal work had risen to 35.1 million.

This is 73 percent of the labor force, it said.

Last year, the Employers Confederation of the Philippines (ECOP) said only a small percentage of workers benefit from a wage increase since most are engaged in informal and low-paying work not covered by wage orders.

They are the tricycle drivers, farm workers, market and street vendors, workers in own family-operated businesses, sari-sari store owners, handicraft and tool assemblers, ECOP said.

“What deserves greater attention is the primordial need to create more jobs and preserve those that still exist,” it said, as it stressed the consequences of a wage increase for micro, small and medium enterprises (MSMEs).

According to Prof. Tim Gindling, a consultant for the World Bank, in an article published on I Z A World of Labor, “if minimum wage legislation does not cover a large pool of informal workers, higher minimum wages are not likely to reduce poverty.”

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ECOP, meanwhile, asked the government to help micro businesses cope with the effects of the wage increase, which will take effect next month, saying that most, or 90 percent, of enterprises in the Philippines are micro.

READ: Baguio groups call for wage hike, support for informal sector on Labor Day

TAGS: Bongbong Marcos, Ibon Foundation, informal workers, INQFocus, living wage, wage hike

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