P100 legislated wage hike questioned by House economists

Economists in the House of Representatives raised doubts about bills seeking a legislated wage increase, saying this will result in higher prices of goods and services, and the shutdown of small and medium enterprises (SMEs).

Representative Stella Quimbo, vice chairperson of the appropriations committee, and Rep. Joey Salceda, head of the ways and means panel, were asked to react to the P100 legislated wage hike bill in the Senate, which has reached the plenary.

“When we increase minimum wage, and this is for all firms, what do you think will happen? Ang gagawin po ng mga kumpanya ay ipapasa po nila ang pagtaas ng minimum wage sa presyo, kaya inaasahan po natin ang inflationary problem,” Quimbo said.

(Companies would just pass on the additional cost to the prices of goods and services, so we will have an inflationary problem.)

“Magkakaroon po tayo ng cost-push inflation. You will temporarily satisfy our workers, who are also consumers. But eventually, the raise in their salaries will be eaten up by high prices," she added.

Salceda said the present regional wage board, which sets varying rates according to region, is already working.  He added the setup does not threaten the existence of SMEs.

“We already have a workable arrangement with the regional wage boards. We cannot say that this is not responsive. There is no unintended consequence. If only we are able to divide the giant companies, that could work. Kaso tatamaan niyan, SMEs eh. Hindi talaga nila kakayanin,” he said.

(That will affect the SMEs, they won’t be able to afford that.)

“May mga SMEs na hindi kakayanin iyong P600 minimum wage per day...kung plus P100...magtatanggal sila ng tao para lang kayanin ang P700. I am sympathetic, really, on wage hikes, but one reason [not to agree] is 99% of our enterprises are SMEs. Would you like to kill them?,” Salceda added.

(There are SMEs that won’t be able to afford a P700 day minimum wage.)

House Deputy Speaker Jayjay Suarez, meanwhile, said the wage hike may sound nice, but the "bigger economy" should be addressed first.

“It sounds nice, it feels nice, but when it gets there, it may not be very nice. We need to address this issue of having a bigger economy first so we would have more money, more industry players, and more maneuverability in terms of labor laws and practices,” he said.

Several bills seeking a legislated wage increase are also pending at the House committee level.

Quimbo and Salceda said allowing foreign capital ownership in vital industries by amending the 1987 Constitution will address this lack of funding for a legislated wage hike.

“We need to deal with the sources of inflation. Increasing the minimum wage, we can do that if there is a productivity increase. But given our PISA results....this [result] does not indicate such. We need to expand our economy, and that is why we are pushing for economic Cha-cha,” Quimbo said, referring to the 2022 Programme for International Student Assessment results wherein the Philippines placed as the sixth lowest among the 81 countries and economies participating in the study. 

“It is good we are talking about minimum wage, but we have to think long and hard about the timing. We need to address the inflation first, and we will be able to do that when we are able to expand our economy. Then we can talk about an increase in minimum wage,” she added.

Salceda then cited that the fact that foreign enterprises give wages that are 74% higher than that of Filipino enterprises clearly shows that economic Charter change is needed to address low wages.

“We have to expand our economy for this and that can only be done with economic Cha-cha,” Salceda said. —LDF, GMA Integrated News