Aquino: Things could get worse with higher pay

President Benigno Aquino III INQUIRER FILE PHOTO

BATO, Catanduanes—The labor situation in the country would only worsen if the government agrees to the demand of militant labor for a P125 legislated wage increase, President Benigno Aquino III said here Wednesday.

A P125 wage increase would translate to $3, he said. With the minimum wage now standing at $9 to $10, the minimum wage would jump to from $12 to $13 with a legislated wage hike, the President said.

By comparison, Asian countries with which the Philippines is competing for jobs and investments only pay their workers a minimum wage of $2, he said.

“If the job then is the same, why should it go to us?’’ Mr. Aquino said.

And with the 2.7 million to 2.9 million people who are jobless in the Philippines, he asked whether it was right “to increase the cost of labor and be sure that businessmen will be able to hire the unemployed.’’

“In two years’ time if we allow the legislated wage hike, there will be over half a million who will lose their jobs because $2 versus $3 is really a big difference,’’ he said.

And more significantly, if the demand for a legislated wage hike is granted, prices of commodities would go up and  employers would be laying off employees, Mr. Aquino said.

The legislated wage hike would only worsen the situation for workers “whose interest we are supposed to push,’’ he said.

The militant Kilusang Mayo Uno (KMU) on Wednesday criticized the President for “callously” rejecting Filipino workers’ calls for a P125 wage increase based on an “erroneous computation.”

“Rejecting workers’ longstanding call for a significant wage hike on the basis of an erroneous computation and on Labor Day at that is the height of insensitivity toward the plight of workers,” said KMU chairman Elmer Labog.

Labog said Mr. Aquino incorrectly multiplied the proposed wage hike by the country’s entire 40-million labor force, instead of the number of wage and salary workers.

Multiplied by 15 million wage and salary workers, the computation would have totaled P536 billion, not P1.43 trillion, said the KMU leader.

On Labor Day, Mr. Aquino said the government could not grant a P125 across-the-board minimum wage increase since it would cost P1.43 trillion for a P9-trillion economy.

The labor group also cited a study by the independent think tank Ibon Foundation two months ago that showed that a P125 wage increase would amount to a 12-percent reduction in business profits.

“A significant wage increase should not lead to massive layoffs, factory closures and inflation. It should be reduced from capitalists’ profits, which have been increasing through the years,” said Labog.

The group disputed Mr. Aquino’s claim that the country now had the highest minimum wage compared to its Southeast Asian neighbors.

Filipino workers’ counterparts in Southeast Asia may be receiving lower minimum wages in nominal terms but their living conditions may be better, with the price of commodities lower and the presence of state subsidies for social services such as education and health, KMU said.

KMU also cited on Wednesday a 2011 study by the Union Bank of Switzerland that showed  Manila had the third lowest purchasing power among 73 cities surveyed.

“What is clear is that Filipino workers are suffering from high prices, expensive social services and general hunger and poverty,” said Labog.

“The problem with the President is that he is always taking the viewpoint of the foreign investors, never of Filipino workers. The overall situation of the workers should be assessed, over and beyond the minimum wage that they receive,” he said.