Exporters to seek exemption from wage hike; small firms face burden

Exporters in Cebu may seek an exemption from the new minimum wage after a P22 per day increase was approved.

Allan Suarez, chairman of PhilExport Cebu, said the export sector is still recovering from effects of the global recession and dealing with rising strength of the peso against the US dollar.

He said the next two years would be a big challenge for the sector and that exporters have to decide on their next move about the the wage increase.

Only companies in financial distress, newly established companies and those in retail and service establishments employing not more than 10 employees can seek an exemption, said Regional Director Ma. Gloria Tango of the Department of Labor and Employment.

“We have to make clear that the exemption isn’t automatic. They have to file an application with the Regional Tripartite Wages and Productivity Board and we have to evaluate the petition,” she said.

She said the wage board will require the financial records of the company as proof of its financial distress.

Tango said it’s no longer feasible to exempt an entire sector because the wage board already finalized wage order number 17.

The P22 increase will take effect by mid December or before Christmas after the full text of the wage order is published in a newsppaer.

Business leaders in Cebu weren’t pleased with the P22 hike in the daily minimum wage which would bring Metro Cebu floor wages to P327 a day, the second highest in the country after the National Capital Region.

This would burden small and medium enterprises, which account for over 90 percent of businesses, said Cebu Chamber of Commerce and Industry president Prudencio Gesta.

Philexport Cebu president Venus C. Genson said exporters are still dealing with the strong peso and the P22 wage increase will add to their costs.

“Our orders are booked a year ahead and we base our contract prices on last year. This is additional cost to us that will make the business more unprofitable,” said Genson.

Philexport Cebu executive director Fred Escalona said the export industry is still unstable.

Mandaue Chamber of Commerce and Industry president Philip N. Tan said the wage hike may result in non-compliance, closure or downsizing by some small businesses.

“It’s inevitable. Some people may lose their jobs in the process and while other industries are expanding job opportunities, not all of these people will fit the requirement,” said former MCCI president Eric Ng Mendoza.