Minimum wage hike benefits only 10% of labor force, group says

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Metro Manila (CNN Philippines, December 9) — While it recognizes the right of labor groups to call for a wage hike, the Employers Confederation of the Philippines (ECOP) said approving a pay increase will only benefit 10% of the labor force.

“There is a reality that people have to accept. Only 10% of the labor force is covered by the minimum wage which is really a problem because every time you raise the minimum wage, you leave the 90% behind,” ECOP President Sergio Ortiz-Luiz Jr. told CNN Philippines’ The Source on Friday.

Ortiz-Luis said the 90% includes drivers of public utility vehicles, market vendors, and workers in the agriculture sector, or those who usually do not have employers.

Lagi silang naiiwan (They are always left behind). That is the problem,” he said.

Increasing the minimum wage may also negatively impact businesses, specifically the micro companies, or those that have less than 10 employees.

According to Ortiz-Luis, 50% of these businesses shut down due to the COVID-19 pandemic, and many have yet to resume operations.

“So what do they do if you mandate an increase? They say there is exemption anyway, but the exemption is only good for one year, and you present documents that will need an accountant and lawyer, so it’s useless, they don’t even bother,” he said.

Instead of going for the exemption, Ortiz-Luis said these companies may reduce their number of workers. They can also opt to pass the cost of the increased wage to customers by increasing the price of their product or service, which will become a factor in the rise in inflation, he added.

This week, labor groups led by Kapatiran ng mga Unyon at Samahang Manggagawa filed a petition for a ₱100 daily wage increase for workers in Metro Manila with the Regional Tripartite Wages and Productivity Board.

The group asked the regional wage board to issue a new wage order as inflation rate rose from 2.5% in October 2021 to 7.7% one year later.

In May, the Labor department said the new order increasing the minimum wage in Metro Manila by ₱33 will take effect the following month. This increased the minimum wage in the capital region to ₱570 for the non-agriculture sector and ₱533 for the agriculture sector.

“This will be taken up in the wage board. We are not objecting to the fact that there is a supervening condition that they can file (for a petition),” the ECOP head said about the latest petition.