Laborers are seen at work in a factory at the Mactan Export Processing Zone (MEPZ) in Lapu-Lapu City in this file photo. (Photo from the Facebook account of the MEPZ Workers Alliance)
MANILA, Philippines — A labor leader on Tuesday quelled worries in the business sector that a proposed P350 daily wage hike would bear “disastrous consequences” on their firms.
On Monday, Employers Confederation of the Philippines (Ecop) President Sergio Ortiz-Luis Jr. said that the House of Representatives’ proposed bill seeking a P350 daily minimum wage increase for private workers would result in the closure of many micro, small, and medium enterprises (MSMEs).
READ: P350 wage hike to hit biz sector hard – employers
He claimed that this was because MSMEs would not be able to cope with the additional expense of a pay increase of such a magnitude.
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However, in response to Ortiz-Luis Jr., Federation of Free Workers (FFW) President Emeritus Allan Montano mentioned that a wage hike would actually help spur the growth of MSMEs.
“Increased wages translate to enhanced purchasing power for workers who, in their dual role as consumers, are likely to spend their earnings within their local communities—on food, groceries, and agricultural products,” Montano explained in a statement as he challenged the views of employers on the pay increase.
“This, in turn, benefits businesses, particularly MSMEs, by fostering a vibrant local economy,” he added.
Inflationary?
The Ecop chief also cautioned that a wage hike as big as P350 would cause a steeper increase in the country’s inflation rate, echoing his statement regarding the Senate’s earlier proposed P100 wage hike.
To this, Montano maintained his group’s claim that wage increases help boost the country’s economy.
The FFW previously said economic models proved that higher purchasing power among laborers, who are also consumers, will help stir economic activity in the country which can slow inflation.
READ: Gov’t must hike daily wage to curb inflation, says labor leader
“Additional income in the hands of workers, who are also consumers, rather than causing inflation, contributed positively to the economy by creating jobs and stimulating economic growth,” FFW’s Sonny Matula previously told INQUIRER.net.
Government intervention
To further ease the burden of a possible wage hike on business owners, Montano urged the government to support smaller firms through wage subsidies.
According to Montano, the subsidies will “assist enterprises in adapting to the wage increase, ensuring that the positive cycle of competitive and sustainable business practices continues to contribute to national economic health and worker welfare.”
Montano, a lawyer, further said that provisions in the Wage Rationalization Act of 1989 allow the application for exemptions on businesses genuinely struggling to meet new wage standards.
On Sunday, House Majority Leader Manuel Jose Dalipe said the lower chamber has agreed to consider a P350 daily minimum wage increase for all private sector workers.
The House of Representatives is slated to convene on Feb. 28 to discuss the proposed wage hikes.