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Minimum wage hike: Boon or bane?

Manila Standard

The good news is the Senate has approved on third and final reading Senate Bill 2354, which proposes a P100 across-the-board hike in the daily minimum pay of private sector employees.

Senate President Juan Miguel Zubiri, co-sponsor of the bill, said if the measure gets signed into law, it could be “the first time since 1989” that a legislated pay hike would be implemented nationwide.

He likewise emphasized the pressing need to increase the minimum wage of workers, particularly those in Visayas and Mindanao who are earning P360 a day: “How can you live with P360 a day? It’s impossible.”

Once this bill is passed and becomes a law, this will provide a great relief to our poor and hardworking employees.

The proposed law guarantees an increase in the daily pay of around 4.2 million minimum wage earners.

Under the bill, all employees in the private sector, whether agricultural or non-agricultural, are entitled to the P100-daily minimum wage increase.

Over at the House of Representatives, there are bills seeking a P150 hike and P750 across-the-board minimum daily wage for private sector workers and P33,000-a-month entry level for public sector workers.

Another bill has been filed seeking a P50,000 entry salary base for teachers.

For the labor sector, however, the P100 wage proposal falls short of the P150 originally promised and “a far cry from what is needed to save minimum wage earners from the poverty wages imposed upon them by the regional wage boards.”

Still, they said they welcome it as a form of relief, and a good start to correcting the problems created by the regional wage setting mechanism.

Employers are also up in arms against the wage hike proposal, but for another reason.

The Employers Confederation of the Philippines said it would be a “catastrophe” to legislate the P100-daily minimum wage increase as it could cause prices of goods to spiral higher or even force small firms struggling to pay higher salaries to lay off workers.

For Ecop president Sergio Ortiz-Luis, the proposed wage increase would benefit only 10 percent of the country’s labor force who are employed in stable medium- to large-sized companies that could afford to pay higher salaries.

“If you increase wages without considering your sales or profit, you can only resort to two things—pass on the cost [to consumers] or reduce your number of workers. Would we want that to happen,” he asked.

A higher minimum wage would also lead to higher inflation, the Ecop head pointed out, and significantly impact the country’s job creation initiative this year as this could keep investors from pushing through with plans to establish or expand local operations.

The government should make up its mind on whether a legislated wage hike should be pursued given the need to strike a balance between the welfare of workers and the viability of micro, small and medium-sized businesses that could find it very difficult to shoulder wage increases at this time.

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