Lawmaker proposes gradual 3-year wage hike for private workers

JOEY CONCEPCION | INQUIRER PHOTO

A lawmaker on Wednesday proposed gradually increasing the minimum daily wage for private sector workers by P100 over three years.

Manila Rep. Joel Chua believes this approach would be manageable for businesses still recovering from the pandemic. He emphasized the importance of balancing the interests of workers and businesses while implementing the wage hike.

A similar suggestion was offered by businessman Joey Concepcion, founder of the entrepreneurship advocacy Go Negosyo, who said the pay increase should be done on a staggered basis to allow businessmen to plan and prepare for it.

Concepcion did not give a time frame for its implementation, saying he would leave the details to experts.

House version

On Monday, despite broad objections from business groups, the Senate unanimously passed on third and final reading Senate Bill No. 2534 which seeks a P100 daily wage hike for private employees. The House of Representatives has yet to approve its version of the measure, as several bills for salary increases ranging from P150 to P750 remain pending before the labor and employment committee.

Chua cautioned against a onetime, big-time pay hike, outlining three possible scenarios should this occur.

“First, businesses can pass on the increased labor costs to consumers, which means prices of commodities could go up. Second, businesses might lay off their workers. Third, some COVID-hit businesses that are just starting to recover from the pandemic may close,” he said.

Shock to economy

According to Chua, the wage increase should be implemented in such a way that “would not shock the economy,” explaining that small, micro and medium enterprises might not be able to comply.

Concepcion, for his part, pointed out that any salary hike implemented by previous administrations was done gradually and for good reason.

“Not everybody can afford a P100 wage increase…. Do we implement a P100 wage increase in one go or [do] we plan that over time so that it won’t hurt businessmen who are just starting to recover?” he said in an interview over “Bagong Pilipinas Ngayon” on Wednesday.

“What we should do is not implement a P100 wage hike in one go. Let’s start to spread that over a period of time,” the Private Sector Advisory Council head for jobs creation added.

“The proposal is to implement the P100 wage increase. If that can be staggered over time, then maybe let the discussion continue on that basis, and let’s also see how businesses can live with that,” Concepcion said.

‘A catastrophe’

Earlier, the Employers Confederation of the Philippines and National Economic and Development Authority warned that the proposed pay hike would be “a catastrophe” as it may hurt small businesses and cause the prices of goods and services to rise.

According to Concepcion, he was not against the Senate bill but he had his “reservations” about it, given its possible impact on small businesses.

“What we worry more about are those who are barely making it, coming from the pandemic, and coming back to the acceleration of the economy. Let’s not break the momentum,” he said.

“I am not against the wage increase. I think we want to uplift the lives of our people… To some extent, I also sympathize with our senators. We really want a better life for our people and ultimately that’s our goal. And as wages do increase, consumption spending will increase as well and that will help the economy too,” Concepcion added.

Considerations

At a press conference on Wednesday, House committee on appropriations senior vice chair and Marikina Rep. Stella Quimbo said the committee on labor and employment would begin its hearings on the pending salary hike bills on Tuesday.

“As we proceed in these discussions, our goal is to ensure that the legislation fulfills its intended objective: ensuring that the income of minimum wage earners can sustain the basic needs of their families,” she told reporters.

She stressed, however, that implementing a uniform salary increase in regions with their respective “unique cost of living” would require careful consideration.

Overall effect

“The regional wage boards were established through the Wage Rationalization Act to determine and fix the minimum wage rates applicable in their region and ensure it is responsive to the regional economic conditions,” Quimbo said.

The deliberations should focus on the pay hike’s overall effect on the country and different sectors, including whether to do away or enhance the roles of regional wage boards, she added.

READ MORE: Employers: A catastrophe to grant P100 wage hike

Its impact on minimum wage earners’ statutory contributions, for example, to the Philippine Health Insurance Corp. and Social Security System which were likely to go up, should also be taken into consideration, Quimbo said.

Other factors that should likewise be examined were the possibility of employers passing on the cost of the pay hikes to customers or laying off employees to cut down on operating expenses.

“We, your representatives, do not want these to happen,” Quimbo said. “Thus, it is important to hear from our economic managers about the effects of an across-the-board minimum wage hike on our economic health, particularly on the unemployment rate, inflation rate and the (gross domestic product) growth rate.”

READ MORE: P100 daily wage hike bill approved on final reading