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Inflation-ravaged 2018 shakes faith in regional wage-setting

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wage protest
PHILSTAR

By Gillian M. Cortez
Reporter

FOR NEARLY three decades, wages in the Philippines were set by region, a practice which has been questioned after inflation averaged 5.2% in 2018, thereby eroding the spending power of workers faster than the system could keep up.


The Wage Rationalization Act or Republic Act 6727 was signed into law on June 9, 1989. It called for the Regional Tripartite Wages and Productivity Boards (RTWPB) to prescribe and establish the minimum wage rates in their respective regions. Covered by this law are minimum wage earners in the private sector only.

Nagkaisa Labor Coalition (Nagkaisa) Spokesperson Renato B. Magtubo said that wage orders of RTWPBs have not provided sufficient pay increases.

“It’s not enough because even if there are increases by regional wage boards, they are small, and there is still no concrete action behind the promise of a national minimum wage,” Mr. Magtubo said in a phone interview with BusinessWorld.

The Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) believes the system “has not evolved with the times. It has become obsolete and irrelevant to the interest of (workers),” its Spokesperson Alan A. Tanjusay told BusinessWorld in an online message.

The Wage Rationalization Act also aims “to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.” According to University of the Philippines School of Labor and Industrial Relations (SOLAIR) Associate Professor Melissa R. Serrano, the law failed to meet this objective.

“The reason why they decided to make it regional is to attract businesses to the regions… But that did not meet that particular objective and goal,” she said in an interview with BusinessWorld.

Employers Confederation of the Philippines (ECoP) Acting President Sergio R. Ortiz-Luis, Jr. said last month that removing the regional minimum wage will just scare investors away from provinces and concentrate them in urbanized areas. In Philippine Statistics Authority’s (PSA) latest available data on the regions’ share of GDP, NCR was accounted for the largest share in the Philippines’ economy with 36.4% for 2017.

National Wages and Productivity Commission Director Maria Criselda R. Sy said in an interview with BusinessWorld that the RTWPBs are still the appropriate authority for determining minimum wages appropriate to their regions. She said, “Decisions made on the appropriate minimum wage should be at the areas where the situation exists. The regions are in the best position to identify or determine the wages.” PSA reported that the inflation rate in NCR for December was 4.6% while the corresponding rate for areas outside NCR was 5.6%.

De la Salle University-College of Law Professor Domingo T. Añonuevo said in an e-mail to BusinessWorld that minimum wages should approximate a living wage, or an income sufficient to cover basic needs, since the current mechanism for raising wages “may not be expected to grant substantial minimum wage increases” when inflation reaches levels that effectively wipe out any gains.

Bukluran ng Manggagawang Pilipino Chair Leody de Guzman concurs that minimum wages should correspond to a living wage, telling BusinessWorld in an e-mail: “The cost of living should be the principal determinant of wages… Workers have to live decently in order to work productively.”

Ms. Sy said a living wage and minimum wages are often mistaken for one another, but what distinguishes them is that the minimum wage considers the capability of businesses to pay, since businesses have a say in setting them alongside their counterparts representing workers and government.

Senator Emmanuel Joel J. Villanueva believes the starting point for wage reform is to ensure that businesses pay the correct wages especially when workers are struggling to live within the minimum wage. In a mobile message to BusinessWorld, Mr. Vilanueva said: “By increasing the penalty, we hope to put more teeth into the law and induce employers to pay their workers what is rightfully due them.” Mr. Villanueva added with Senate Bill No. 1381 or “The Amendment to the Wage Rationalization Act,” establishments found violating the law will pay a penalty not less than P100,000 and moral damages of P30,000 for each worker involved. The bill is currently pending at committee level.

In a Jan. 6 statement, TUCP Party-list Representative Raymond C. Mendoza called on the administration to abolish the RTWPB system and replace it with a single tripartite board which will determine the national minimum wage. He is also behind House Bill 7805 or “The Living Wage Act of 2018” which will give a P320 increase in prevailing wages in all regions. Not too long before the bill was filed, the Makabayan bloc filed HB 7787 which seeks to implement a national minimum wage of P750.