LABOR WATCH

Wage Hike Should Not Depend on Regional Wage Boards – Solon, Labor Economist

The President’s hints on the possibility of a wage increase for Labor Day would have been a glimmer of hope if they were clearly not dependent on the decisions of the Regional Wage Boards, says Anakpawis Rep. Crispin Beltran. A labor economist interviewed by Bulatlat explains why.

BY ALEXANDER MARTIN REMOLLINO
Bulatlat

Lawyer and councilor Angela Librado-Trinidad speaks at KMU-Southern Mindanao congress Bulatlat File Photo

“Malacañang’s offer of a wage increase as a gift for workers on Labor Day had better be a national legislated wage increase and not an Emergency Cost of Living Allowance (ECOLA) and measly increases through the regional tripartite wages and productivity boards,” says Anakpawis (Toiling Masses) Rep. Crispin Beltran, a few days before Labor Day. Labor unions under the banner of the Kilusang Mayo Uno (KMU or May First Movement), which is celebrating its 25th founding anniversary this year, have been demanding a P125 across-the-board, nationwide wage increase since 1999 – when the national average daily cost of living for a family of six, or the average Filipino family, was still P388.71 ($9.94 based on the year’s exchange rate of $1:P39.09). Since then, the national average daily cost of living for an ordinary Filipino family has shot up to P587.33 ($10.79 based on an exchange rate of $1:P54.45 as of April 29, 10:50 a.m. Philippine time).

The National Capital Region (NCR) remains the region with the highest average daily minimum wage, with P250 plus P50 cost-of-living allowance, or a total of P300 ($5.51) daily.

Malacañang (the presidential office) had hinted at the possibility of a wage increase early last week. However, the Palace still seemed to be looking to the Regional Wage Boards for action on the issue.

“The government is taking all reasonable means to cushion the impact of rising prices. And one of these is a strong pitch for an active wage review by the wage boards,” said Press Secretary Ignacio Bunye in an April 21 press statement.

RA 6727

The Regional Wage Boards are a product of Republic Act No. 6727, signed into law in 1989 and otherwise known as the Wage Rationalization Act. The act abolished the national minimum wage rate, said Paul Quintos, executive director of the Ecumenical Institute for Labor Education and Research (EILER), in an interview with Bulatlat.

“There is now no real minimum wage to speak of,” said Quintos, who also 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).

The Philippine Congress enacted Republic Act No. 602, known as the Minimum Wage Act, on April 6, 1951. In his book, The Political Economy of Philippine Labor Laws, Dr. Edberto Villegas, who used to chair the Development Studies Program at the University of the Philippines (UP) in Manila, wrote that RA 602 was enacted amid labor restiveness due to miserable workers’ conditions in the years immediately following World War II (1939-1945).

RA 6727 did away with RA 602, said Quintos. “It was not declared outright that the national minimum wage was to be abolished,” he points out. “That was rather a consequence of the enactment of that measure.”

Under Sec. 2 of RA 6727, government is supposed to rationalize the fixing of minimum wages for the workers and their families while enabling business and industry reasonable returns on investment, expansion and growth. The act also established collective bargaining as “the primary mode of setting wages and other terms and conditions of employment.” The minimum wage rates will be adjusted based on regional disparities in the cost of living, among others.

Rationalization: politics and economy

But Quintos said, the “rationalization” of wage setting had the political effect of dividing workers’ struggles.

“Before, whenever workers brought forth their demands for wage increases, they did it collectively,” he said. “Now, the tendency especially for those who confine themselves to legal details – the so-called ‘yellow’ or conservative unions – is to address their demands only to their respective Regional Wage Boards. So what happens is that they tend to act separately, they tend to conduct their campaigns separately.”

“The laws of history teach us that when the masses fight separately, they are weak,” Quintos added. “Their strength lies in their unity.”

Economically, he said, wage rationalization limits workers’ right to demand wage hikes. The Regional Wage Boards cannot grant more than one wage increase every year, he explained.

“For example, if they grant a P30 increase in the emergency cost-of-living allowance or ECOLA, that’s it: you cannot demand another increase for the same year even if prices rise quickly enough to overrun whatever gains you may have made,” he said.

Another issue against the Regional Wage Boards, said Quintos, is their very composition. RA 6727 provides for tripartite Regional Wage Boards, composed of one representative each from business, government, and labor.

“But business and government are of the same perspective,” said Quintos. “Government bases its decisions on labor issues on the premise of ‘maintaining investor confidence’ and so on. As regards the labor representatives, they are usually from the conservative unions, which makes them easy to coopt.”

Asked whether wage rationalization has something to do with the structural adjustment loans or SALs granted by the International Monetary Fund and the World Bank (IMF-WB) to the Philippines since the late 1970s, Quintos said it does, considering that labor flexibilization is the neo-liberal agenda for the labor sector.

“Generally, labor flexibilization aims to give capital – not labor – more flexibility,” Quintos pointed out. “It consists of whittling down labor’s hard-earned victories which capitalists may perceive as fetters to their unbridled exploitation of labor.”

Quintos however said that the Philippines has no specific SAL commitment to “rationalize” wage-setting. Nevertheless, he said, wage “rationalization” was devised by the government to fit into the neo-liberal scheme of providing an “investment-friendly” climate. Bulatlat 

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