Data shows employers can afford P100 wage hike – IBON

This file photo shows laborers at the Mactan Export Processing Zone (MEPZ) in Lapu-Lapu City. (Photo from the Facebook account of the MEPZ Workers Alliance)

MANILA, Philippines — There is enough data to prove that employers can afford to pay the proposed P100 daily wage increase for private workers in the country, the think tank IBON Foundation said on Wednesday.

This follows statements from some members of the House of Representatives and employers claiming that businesses would be adversely affected if the proposal becomes law.

“All those with a sincere belief that workers should have a just share in the fruits of their labor can have confidence that the data at hand already clearly affirms that workers deserve much more than they’re getting and that employers can give much better wages than they’re giving,” IBON Executive Director Sonny Africa, told Inquirer.net in a text message.

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‘Alarmism’

In a separate statement, the group said the arguments claiming that the proposed wage increase would trigger inflation and lead to layoffs “do not hold water.”

IBON computed data from the 2021 Annual Survey of Philippine Business and Industry and the country’s average daily basic pay in the same year from the Philippine Statistics Authority.

According to the group, their computations show that the “alarmism of employers is baseless” since a P100 daily minimum wage hike among their workers would not have a crippling impact on businesses.

“Opponents claim that the Php100 wage hike is inflationary. However, IBON estimates that even a Php100 across-the-board (ATB) wage hike – meaning not just for minimum wage earners – is equivalent to just a tiny 7.1 percent of private establishment profits,” the group explained in a statement on Tuesday.

IBON further broke down the numbers and said that the P100 ATB wage hike is equivalent to “just 7.5 percent of MSME [micro, small, and medium enterprise] profits – 7.9 percent in micro, 7.6 percent in small and 6.7 percent in medium size firms – and to just 6.7 percent of large establishment profits.”

On claims that MSMEs would suffer from the increased pay for workers, the group said that while 98.6 percent of all establishments in the country are indeed MSMEs, the majority of employees are still in large firms, which account for 54.4 percent of all employees nationwide.

‘Beneficial to economy’

The group further said that Filipino laborers urgently need a wage increase as the current minimum wage is insufficient to cope with the rising cost of goods.

“For instance, the NCR daily nominal minimum wage is already the highest in the country. But it is just a little over half (51.1 percent) of the Php1,193 family living wage (FLW) for a family of five in January 2024. Meanwhile, the average daily nominal wage of Php438 nationwide is just one-third (36.5 percent) of the Php1,198 average nationwide FLW,” IBON explained.

IBON also noted that the proposed wage hike will benefit the economy as a whole as improving the purchasing power of laborers will allow them to buy more goods, which will spur local economic activity.

The Employers Confederation of the Philippines (Ecop) said on February 16 that the proposed P100 daily minimum wage hike will cause the prices of goods to increase and may even force small firms to lay off workers.

This was echoed by some members of the House of Representatives, including Marikina 2nd District Rep. Stella Quimbo, who said that a wage increase will result in cost-push inflation as small firms will be forced to make their products more expensive to afford to pay the employees.

Senate Bill No. 2534, which seeks to increase the daily minimum wage among private workers by P100 passed the third and final reading at the upper chamber on February 19.