ANALYSIS
Low Purchasing Power
Negates Recent Wage Hikes
The good news is that
all regional wage boards in the country have granted wage increases. This
obviously means that private sector workers nationwide are now entitled to
higher wages. The bad news, however, is that the increase in wages is not
enough to offset the decline in purchasing power.
BY DANILO ARAÑA ARAO
Bulatlat
That all Regional
Tripartite Wages and Productivity Boards (RTWPBs) in the country approved
wage increases in July and August does not mean that they had the workers’
interests in mind. On the contrary, workers have every reason to question
the wage increases not only as being “too little, too late” but as being
“too callous, too obnoxious.”
Effective July 11,
private sector workers in the National Capital Region (NCR) are entitled
to a daily minimum wage rate ranging from P313 ($6.11) for agricultural
workers to P350 ($6.83) for non-agricultural workers. In late July and
early August, other RTWPBs followed suit in granting wage increases, the
last ones being Regions I (Ilocos) and II (Cagayan Valley).
The regional wage
board in Region I granted a P3 ($0.06) to P13 ($0.25) wage hike and
integrated into the basic wage the P12 ($0.23) cost of living allowance
(COLA). The regional wage board in Region II, on the other hand, granted a
P10 ($0.20) wage increase. The two decisions took effect last August 9.
At present, the daily
minimum wage rate for non-agricultural workers ranges from P200 or $3.90
(Autonomous Region in Muslim Mindanao or ARMM) to P350 or $6.83 (NCR).
While one may argue that a wage increase, the amount notwithstanding, is
better than nothing, it is still necessary to assess how the recent wage
increases now affect a person’s buying capacity.
Based on the July
2006 consumer price index (CPI) released by the National Statistics Office
(NSO), it appears that the Philippine peso has lost 28% of its value if
one were to analyze the prices of goods and services six years ago. The
CPI is used to monitor fluctuations in the prices of selected commodities
and is necessary to compute the purchasing power of the peso (PPP). The
latter, after all, is derived from the equation (1/CPI) x 100.
Purchasing power
measures a person’s buying capacity by comparing how prices fluctuated
through the years. In the case of the current CPI data sets, 2000 is used
as the base year.
In July 2006, the
real value of P1.00 ($0.02) was only P0.70 ($0.01) in the NCR. This means
that compared to prices six years ago, a person needed only, say, P70
($1.36) in 2000 to buy the same goods and services that are now worth P100
($1.95).
Data on the PPP in
other regions show that the value of one’s money has been eroded by as
much as 32 percent in the case of ARMM. (See Table)
In the context of the
recent wage hikes, it appears that the real value of the P350 ($6.83)
daily minimum wage rate in the NCR is only P246.12 ($4.80). In other
words, the P103.88 ($2.03) of an NCR-based worker has been eroded due to
increased prices of goods and services in just a period of six years.
The situation is the
same in other regions as the difference between the nominal and real value
of daily minimum wage rates ranged from P53.85 or $1.05 (Cagayan Valley)
to P78.26 or $1.53 (Calabarzon).
The recent wage
increases are therefore too small to have a significant impact on one’s
purchasing power due to increased prices of goods and services through the
years. The data therefore serve to both quantify and qualify the organized
workers’ call for a legislated increase in the daily minimum wage rate for
private sector workers nationwide amounting to P125 ($2.44).
The organized
workers’ demand has been made since August 1999 when the daily minimum
wage rates ranged from P140 or $2.73 (ARMM) to P223.50 or $4.36 (NCR).
Analyzing the wage increases granted by the RTWPBs from 1999 to August
2006, the NCR-based workers were provided the highest cumulative wage
increase of P126.50 ($2.47), but P50 ($0.98) of this was in the emergency
cost of living allowance (ECOLA) and not in the basic pay. In the case of
workers in other regions, the cumulative wage increase ranged from P30 or
$0.59 (Mimaropa) to P102.50 or $2.00 (Central Luzon).
Clearly, it is
absolutely necessary for the government to heed the call for a P125
($2.44) legislated wage hike if only to make the workers and their
families cope with the increased prices of goods and services. Bulatlat
Peso-dollar
exchange rate computations are based on P51.25 per US dollar.
Daily Minimum Wage Rates
(non-agriculture)
and Purchasing Power of the Peso
August 2006 (in
pesos)
|
|
Nominal
Value |
Purchasing Power
of the Peso (PPP) |
Real
Value |
Philippines |
290.73 |
0.7205 |
209.47 |
National Capital
Region (NCR) |
350.00 |
0.7032 |
246.12 |
Areas outside NCR |
231.47 |
0.7283 |
168.58 |
|
|
|
|
CAR |
235.00 |
0.7107 |
167.01 |
Region I (Ilocos) |
225.00 |
0.7158 |
161.06 |
Region II (Cagayan
Valley) |
218.00 |
0.7530 |
164.15 |
Region III (Central
Luzon) |
278.00 |
0.7446 |
207.00 |
Region IV-A (Calabarzon) |
287.00 |
0.7273 |
208.74 |
Region IV-B (Mimaropa) |
230.00 |
0.7508 |
172.68 |
Region V (Bicol) |
220.00 |
0.7348 |
161.66 |
Region VI (Western
Visayas) |
222.00 |
0.7396 |
164.19 |
Region VII (Central
Visayas) |
241.00 |
0.6969 |
167.95 |
Region VIII (Eastern
Visayas) |
220.00 |
0.7496 |
164.91 |
Region IX (Zamboanga
Peninsula) |
215.00 |
0.7369 |
158.43 |
Region X (Northern
Mindanao) |
234.00 |
0.7148 |
167.26 |
Region XI (Davao) |
240.00 |
0.7052 |
169.25 |
Region XII (SOCCSKSARGEN) |
224.50 |
0.7429 |
166.78 |
Region XIII (Caraga) |
214.00 |
0.7236 |
154.85 |
ARMM |
200.00 |
0.6854 |
137.08 |
Sources of basic data: Department of
Labor and Employment (DOLE)
and National Statistics Office (NSO)
Nominal value of wage rates are highest nominal wage for August
2006; computation of PPP is based on consumer price index for July
2006 |
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