Employer Group’s Doomsday Scenario - a Myth
Militant solon sees House passage of wage hike bill

A labor leader-turned-legislator and an expert in labor economics take issue with the labor department and an employers group that a legislated wage increase would affect the economy negatively.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

Will a legislated wage hike affect the economy negatively?

Workers rally for wage hike in Davao

A labor leader-turned-legislator and an expert in labor economics emphatically say no to the recent claims of the Department of Labor and Employment (DoLE) and the Employers Confederation of the Philippines (Ecop) that a legislated wage increase would have negative effects on the economy. Ecop and the DoLE recently opposed House Bill No. 345, which seeks a legislated P125 ($2.23 based on a $1:P56 exchange rate).

HB 345, authored by Rep. Roseller Barinaga (2D Zamboanga del Norte, Nationalist People’s Coalition or NPC) in consolidation with Reps. Crispin Beltran and Rafael Mariano (Anakpawis or Toiling Masses), Teodoro Casiño (Bayan Muna or People First), and Liza Maza (Gabriela Women’s Party or GWP) was approved by the House Committee on Labor in August last year, and is now subject to deliberations at the plenary.

Doomsday scenario

Ernesto Bitonio, DoLE spokesman and assistant secretary, said in a press interview Jan. 18 that although it is within the powers of Congress to legislate a wage increase, “the impact on the economy, especially on inflation and unemployment, must be reviewed thoroughly.” 

The labor department’s spokesperson’s position is in synch with an earlier statement by Rene Soriano, Ecop president, that a P125 wage increase would have “adverse and destructive consequences” on the economy.

“Since cost of labor is one of the factors of production,” Soriano also said, “the mandated wage increase would cost more to produce the same quantity of output and the increased cost is then passed on to the market.”

In an interview with Bulatlat, Anakpawis (Toiling Masses) Rep. Crispin Beltran said: “That (Soriano’s line) has been their argument since a quarter of a century ago.”

The labor leader-turned-lawmaker noted that in 1988 there had been a clamor from labor groups for a legislated wage increase, and employers’ groups had predicted then that the measure would damage the economy. In 1989, a bill providing for a P25 ($0.96 based on the then $1:P26 exchange rate) was passed into law following a series of labor mass actions. “But their prediction didn’t come true,” Beltran said.

In a separate phone interview, Paul Quintos, executive director of the Ecumenical Institute for Labor Education and Research (EILER), said that employers’ groups always create a “doomsday scenario” whenever there is a popular demand for a wage increase. He noted in particular that business groups always raise the specter of an increase in the prices of commodities in their opposition to wage increase measures.

Quintos, who holds an MSc in Development Studies from the London School of Economics (LSE) and is a former research associate at the Philippine Institute of Development Studies (PIDS), said that speculations about increased production costs due to a legislated wage hike will not happen. The big corporations can easily put up with a decrease in their profits, he pointed out.

As regards the small enterprises, he noted that employers’ groups always profess to take their condition into consideration when opposing a wage hike, but he also said that it is wrong to blame workers for their plight. He said that even when there are no demands for wage increases, small enterprises continuously suffer from corruption, poor infrastructure, red tape, and globalization policies that favor big multinational corporations.

Social justice and unrest

Furthermore, Quintos said that from the social justice perspective, it is not acceptable that government should sacrifice the workers’ welfare for the sake of small enterprises. “If the small enterprises are in dire straits, workers are in a worse rut,” he explained.

Recent studies by the socio-economic think tank IBON Foundation show the daily cost of living for a family of six (the average Filipino family) nationwide has risen to P492.19, as of December 2004. IBON used data from the National Statistics Office (NSO) for its studies.

But data from the National Wages and Productivity Commission (NWPC) also show the national average daily minimum wage now amounts to only P202.59 – P289.60 short of the national average for the daily cost of living for a family of six.

Asked how he expected HB 345 to fare in the plenary given the stiff opposition from the business sector and even the DoLE, Beltran expressed optimism that it would pass. “Congress might pass the bill, in consideration of the possibility that the continued stagnancy of wages would ignite social unrest,” he said.

The results of the Social Weather Station (SWS) survey for the last quarter of 2004 revealed a prevalence of pessimism about the economy – a phenomenon that previously occurred only in March 2003, the beginning of the U.S.-led attacks on Iraq; September-October 2000, the explosion of the “Juetenggate” scandal involving then President Joseph Estrada; and 1984, a year after the assassination of Sen. Benigno Aquino, Jr. Estrada was ousted through a popular uprising in 2001 – thus repeating the 1986 fate of Ferdinand Marcos, who was president in 1984.

Bulatlat tried a number of times to contact Barinaga for his comments on the same issue, but he could not be reached. Bulatlat

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