Government eyes basic wage hike

P750 nationwide up for review, oil prices may hit P12/l next week

• Palace considering fuel excise tax halt

• Peso loses vs. dollar

The government is eyeing to raise the minimum wage nationwide to help workers and their families cope with a looming oil crisis as gasoline prices could rise by a staggering P12 per liter next week following the decision of the United States to ban imports of Russian oil, industry sources said.

COLLATERAL DAMAGE. A woman counts dollar bills at a money exchange center in Mabini, Manila. The peso is facing headwinds from spiraling oil prices, breaching the 52-per-dollar mark this week for the first time since Sept. 2019. Norman Cruz

President Rodrigo Duterte also met with finance officials to consider suspending excise taxes on fuel to soften the blow.

“The increase in the price of diesel and gasoline will be different but if you are referring to a general number, an P8 to P12 per liter increase is correct,” said one industry source, who requested anonymity.

Another industry source said forecasts of a sharp increase were driven by the current supply situation, the sanctions on Russia, and the depreciation of the peso.

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Petro Gazz, however, announced on Wednesday it will be slashing prices of its fuel products from Thursday, March 10 (starting at 6 a.m.) to Sunday, March 13.

The company said the move aims to “minimize the impact” of rising oil prices on customers.

The rollback will be as follows: P5.85/liter of diesel and P3.60/liter of gasoline.

Labor Secretary Silvestre Bello III directed the Regional Tripartite Wages and Productivity Boards (RTWPBs) across the country to speed up the review of the minimum wages to help workers and their families cope with the looming oil crisis.

Bello said the skyrocketing prices of oil products aggravated by the ongoing conflict between Russia and Ukraine may be a compelling reason for the wage boards to recommend raising the minimum wages of workers.

Several workers associations last week filed a petition with the Regional Tripartite Board seeking an additional P213 minimum wage increase in Metro Manila. If granted, the minimum wage hike will rise to P750 a day.

The current daily minimum wage in the National Capital Region (NCR), for instance, of P537 may no longer be enough to cope with the price of basic commodities such as food, electricity, and water bills.

Bello, who chairs the Tripartite Wages and Productivity Board, said the RTWPBs, along with the National Economic and Development Authority (NEDA), the Department of Trade and Industry (DTI), and representatives from both the labor and employers groups, as a matter of procedure, monitor the wage levels, assess the economic factors and provide recommendations for the adjustment of minimum wages all over the country.

“Setting and adjusting the wage level is one of the most challenging parts of minimum wage fixing. Minimum wage cannot be very low as it will have very small effect in protecting workers and their families against poverty. If set too high, it will have an adverse employment effect. There should be a balance between two sets of considerations,” Bello said.

RTWPBs nationwide receive petitions for minimum wage increase in their respective areas.

“Every year, we have what we call an anniversary period where we make an assessment of all petitions received. One petition called for a uniform increase of P750 in the minimum wage nationwide,” Bello said.

The Labor chief expressed confidence that the RTWPBs will submit their recommendations before the end of April.

The cost of electricity, too, was expected to shoot up in March due to a tight supply, the biggest power distributor, Manila Electric Co. (Meralco) said.

COLLATERAL DAMAGE. An inspector from the Department of Energy checking the price and the weight of a liquified petroleum gas (LPG) cylinder at a retail outlet in Parañaque City on Wednesday, March 9, 2022. Danny Pata

“Movements in world crude oil prices affect Meralco’s generation costs indirectly, mainly through Malampaya gas prices. The current Malampaya price is based on world crude oil prices from July to December 2021, so that the price does not yet reflect the recent surge in oil prices. These will be priced into Malampaya beginning second quarter 2022, to be reflected beginning [with] the May 2022 generation charge,” Meralco vice president and head of utility economics Lawrence Fernandez said.

He said this would affect the power supply agreements with the Sta. Rita, San Lorenzo, and San Gabriel natural gas plants, which account for around one-third of Meralco’s supply requirements.

Fernandez added that March bills are likely to go up as well due to a higher generation charge.

Meralco noted that prices at the Wholesale Electricity Spot Market (WESM), the trading floor of electricity, remained elevated in the February supply month, and despite the absence of a yellow alert, the secondary price cap was implemented 5.63 percent of the time.

“Also expected to contribute to the generation charge is the higher share of supply from the WESM as a result of the scheduled maintenance and Quezon Power and San Lorenzo power plants. These maintenance shutdowns were performed in February to ensure availability of their supply during the dry months and the election period,” Fernandez said.

He said the continuing depreciation of peso is also expected to magnify the effect of high fuel prices in the world market.

“These are pass-through charges and as far as Meralco’s own cost is concerned, the distribution charge has not moved since its reduction in July 2015,” Fernandez said.

In Congress, House energy committee chairman Pampanga Rep. Juan Miguel Arroyo joined calls for a special session aimed at passing a measure suspending the collection of excise taxes on fuel.

Arroyo said the loss of income from suspending the excise tax could be offset by the windfall profit the government earned from the value-added tax.

This, he said, was what happened during the term of his mother, former President Gloria Macapagal-Arroyo.

“Before my mother’s term ended, there was also a spate of fuel price increases. To mitigate its impact, then President Arroyo utilized the windfall profit the government collected in excess of its projected revenue through the VAT and excise tax imposed on fuel,” Arroyo said.

Arroyo said lawmakers, even if most of them are back in their respective districts, are on standby should President Duterte call for a special session to address the fuel crisis.

Rep. Sharon Garin of AAMBIS-OWA, chair of the House committee economic affairs, backed the call for a special session, citing the rapid rise in fuel prices.

“Even if we have enough supply for the next 40 days, the rising cost of oil prices will surely warrant the suspension of certain taxes so we can give relief to the affected sectors,” she said.

COLLATERAL DAMAGE. Consumers are likewise bracing for a possible increase in prices of basic goods, including meat and vegetables (below) as well as grocery items as the government rolls out a range of measures to cushion the economy from a possible energy price fallout. Norman Cruz

Senator Sherwin Gatchalian called for increased vigilance against unscrupulous traders who could take advantage to jack up the prices of prime and basic commodities.

The Palace advised the public to await the outcome of discussions between the President and the Department of Finance on proposals to suspend the excise tax on fuel.

Acting presidential spokesman Martin Andanar said the proposal was discussed during the President’s meeting with Executive Secretary Salvador Medialdea and Finance Secretary Carlos Domiguez III.

On Tuesday, the Palace said it is studying the possible declaration of a state of economic emergency due to the impact of a series of fuel price increases and the war in Ukraine.

All this came as the Department of Budget and Management (DBM) said it is already processing release of funds for fuel subsidies for public transport utility drivers and operators and for farmers and fishermen.

DBM officer-in-charge Undersecretary Tina Rose Canda said the funds would be released within the week, or early next week at the latest.

Under the 2022 budget, P2.5 billion is allocated for the Fuel Subsidy Program of the Department of Transportation.

The Department of Agriculture has a P500 million fund to provide assistance through fuel discounts to farmers and fishermen who either individually own and operate agricultural and fishery machinery or operate through a farmers organization or cooperative.

These funds can be released only if the price of Dubai crude exceeds $80 a barrel for three consecutive months.

To get around this rule, Canda said, the Department of Energy has adjusted its computation to include the December crude oil price.

The first tranche from the initial P2.5 billion budget was targeted for distribution in March with the second tranche targeted for April.

The economic team is also pushing to increase the fuel vouchers for agricultural producers to P1.1 billion from P500 million, for distribution in March and April.

Senator Juan Edgardo Angara said the agencies in charge of distributing fuel subsidies should be ready to implement the program now.

As the chairman of the committee on finance, Angara included a P2.5 billion in the General Appropriations Act for financial assistance or fuel vouchers for qualified public utility vehicles (PUV), taxi, tricycle, and full-time ride-hailing and delivery services drivers.

Angara also included another P500 million for the grant of fuel discounts to farmers and fishermen who are just as affected by the continuous hike in oil prices.

“The trigger for the release of the fuel subsidies is when the average price of Dubai crude oil reaches or exceeds $80 per barrel for three months. The price is now at over $100 a barrel so the release of the subsidies should be forthcoming,” Angara said.

On top of the P3 billion total for the transport, agriculture, and fisheries sectors, Angara said there is also another P5 billion lodged under the unprogrammed appropriations also for fuel subsidies.

This means that Congress has given the authority to the Executive branch to provide up to P5 billion for fuel subsidies once funding for this becomes available.

Angara explained that the funds could come from government borrowings or from excess revenue collections.

Also on Wednesday, the Land Transportation Franchising and Regulatory Board (LTFRB) warned transport operators and drivers to keep the minimum jeepney fares at P9, pending any decision on a petition for a fare hike, and that commuters should not be charged more.

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