Workers Need P137 More to Meet WB Poverty Standard

Based on global standards, a worker should be earning P386.70 ($6.86, based on an exchange rate of P56.37 per U.S. dollar) per day. In the National Capital Region where the legislated minimum basic wage is the highest at P250 ($4.43), this amount is still P137 ($2.43) short.

By JOSEPH S. YU
IBON Features
Posted by Bulatlat

The commitment of United Nations member-countries to meet the Millennium Development Goals (MDGs) indicates the widespread acceptance of the World Bank’s poverty line of $1 a day. This measure is enshrined in Goal 1, which targets the reduction by half of the proportion of people living on $1 a day.

But if the Philippine government, as a country that has committed to achieving the MDGs, accepts this measure, then it should also admit that the country’s legislated minimum wages are not enough to meet this international poverty line.

Based on an average prevailing exchange rate of P56 to $1, the daily poverty line for a family of six members is P336 ($5.96) or P10,080 ($178.82) monthly. This is the minimum amount a local worker must earn to be considered non-poor.

If the poverty line is divided by the average of 26 working days in a month, a worker should thus be earning P386.70 ($6.86) per day. In the National Capital Region where the legislated minimum wage is the highest at P250 ($4.43), this amount is still P137 ($2.43) short.

To bring the minimum wage to international poverty standards therefore, the Macapagal-Arroyo administration should legislate a P137 ($2.43) wage increase.

The current P125 ($2.22) across-the-board, nationwide wage increase that labor groups are demanding is even lower than the World Bank (WB) criteria. Amid the rising cost of living, this increase would help ordinary Filipinos meet their basic food and non-food needs.

Arbitrary poverty line

The government’s poverty threshold – the minimum income needed by an individual to be considered non-poor – is also substantially less than WB’s poverty line. The annual per capita poverty threshold as of 2002 is P11,906 ($211.21) or almost P33 ($0.58) daily, a shortfall of P23 ($0.41).

The WB’s poverty measure is based on purchasing power parity (PPP), which suggests that prices of goods and services in different countries tend to equate under floating exchange rates. Therefore, if a poor Filipino living on a dollar a day moved to the United States with no change in income, he or she would still be living on $1 a day.

Although the WB standard is commonly used in gauging world poverty, what is needed however is a locally generated measure that would accurately define in the Philippine setting how much is actually needed for an individual or a family to meet their food and non-food needs.

Alternative measures

One possible measure is the family living wage promulgated by the National Wages and Productivity Commission (NWPC), which estimates the daily wage needed by a family of six to meet their food and non-food needs plus a 10 percent allowance for savings.

As of January 2004, the NWPC estimates the daily family living wage in NCR at P593 ($10.52), assuming that at least two members of the family, or more precisely 1.8 members, work. The daily family living wage therefore should be P329 ($5.84) per working family member or at least P79 ($1.40) more than the prevailing legislated daily minimum basic wage of P250 ($4.43).

But this assumes that at least two family members work and earn a minimum wage. Given widespread unemployment and rampant violations of the minimum wage law, this seems unlikely.

IBON’s estimate of the daily cost of living in the NCR, which measures the minimum amount needed to meet a family of six’s food and non-food needs, is P582 ($10.32) as of August 2004. This means that a family needs at least P14,222 ($252.30) a month to survive, or an income of P547 ($9.70) a day.

It is clear therefore that whatever measure is used, the country’s minimum wages are grossly inadequate to allow working-class Filipinos to meet their basic needs. For this reason, a legislated hike in minimum wages is urgently needed. Bulatlat

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