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Ecop: Wage hike should only cover price increases

05/06/2008

The country’s biggest employers group, the Employers Confederation of the Philippines (ECOP) said it will insist before various regional tripartite wages and productivity boards that any pay adjustment to be granted to workers should merely restore the erosion in wages resulting from an increase in consumer price index (CPI) dating back from the last wage order.

ECOP president Sergio Ortiz-Luis Jr. said any increase in the minimum wage are intended “solely to compensate for the erosion caused by the upward movement of the CPI” from August 28, 2007 in the case of the National Capital Region (NCR) or from the last issuance of a wage order in other regions.

“We, in ECOP, are not socially irresponsible and heartless as to deny the needs of nearly 1.9 million wage and salary workers employed in over 195,000 establishments operating in NCR whose take-home pay has been seriously eroded by the continued increase in the costs of living,” Ortiz-Luis emphasized.

While acknowledging that wages have been eroded by the “ripple effects” of spiraling prices of oil, basic goods, services and other commodities, Ortiz-Luis maintained that the various wage boards should seriously deal with the practice of “non-productivity based increases and its adverse effects particularly on inflation, employment and viability of micro and small establishments.” This is a critical issue that must be considered by the NCR wage board, and for that matter all the other regional wage boards in determining wage increases, he said.

Expressing grave concern over the continuous shrinking formal sector, Ortiz-Luis said an “urgent priority” is to arrest this unwholesome trend by providing for more flexible labor market policy vis-à-vis enterprises, which are the main engines of growth and in the creation of wealth and jobs. “Wages as input to production constitute a significant factor that determines the viability and competitiveness of an enterprise,” he pointed out.

He cited that since 1999 after the Asian financial crisis up to the last survey of establishments in 2006, the number of employment of establishments operating in the formal sector continued to shrink at an alarming rate while the informal sector continued to expand exponentially. As of 2006, the number of establishments lost was 43,704 while employment decreased by 1,028,805. On the other hand, the informal sector expanded by 4,795,015.

In addition, Ortiz-Luis said the wage boards should not lose sight of the plight of micro and small and medium enterprises (SMEs) in wage hike deliberations. “It cannot be denied that not every establishment operates on the same level of viability, productivity and availability of resources. This cannot be truer than in the case of micro and SMEs of which are short in capital and technology but employ 67 percent of all workers in the formal sector. Every time wages are increased which, are invariably not productivity-based, they suffer from the immediate adverse effects of such wage increases,” Ortiz-Luis argued.