ANALYSIS
P125 Wage Hike
and Arroyo’s Economic Boom
If President Arroyo
wants to talk about “social payback from the booming economy,” the only
acceptable and meaningful social payback that Filipino workers deserve
today is a substantial wage increase complemented by price control
reforms, tax reforms, and drastic increases in social services spending
BY ARNOLD PADILLA
IBON Features
Posted by
Bulatlat
IBON Features -
In a televised forum on Edsa Dos’s sixth
anniversary, President Gloria Arroyo said that Filipinos are
experiencing the benefits of the country’s economic boom but “they just
don’t know it yet.”
The statement came after she proclaimed
more than a week before that she would veto any legislation for a
substantial wage hike after the House of Representatives passed House
Bill (HB) No. 345 last December. The bill proposes an increase of P125
in the daily minimum wage over a three-year period.
President Arroyo’s pitch of a booming
economy amid renewed calls for a substantial wage hike has two
implications. First, an increase in workers’ pay at this time may
undermine economic growth and, second, there is no need for a wage hike
since people are already reaping the gains of an economic boom.
However, economics is not only about the
creation of wealth but its distribution as well. Thus for 2007, Mrs.
Arroyo said government would focus on ensuring that the masses got the
social payback by continuing to spread the wealth brought about by
economic gains. But Arroyo, a long-time economics professor before she
entered politics, seems to overlook that one of the most important ways
to increase the share of workers to the pie of social wealth– that was
in the first place created only through their labor power– is to
increase their wages.
Meaningless ‘growth’
Mrs. Arroyo’s recurrent and triumphant
theme in the past few months has been how the country is supposedly on
track to achieve First World status. The gross domestic product (GDP),
by National Economic and Development Authority (NEDA) reckoning, would
hit 7.10 percent this year or three years ahead of the original program.
Full-year GDP growth from 2001 to 2005 at constant prices averaged a
respectable 5.05 percent and posted 5.40 percent in the three quarters
of 2006.
Beneath this considerable economic
growth, however, is the reality of widespread social discontent. In the
October 2006 round of IBON’s nationwide survey, 70.56 percent of the
respondents considered themselves poor; 62.80 percent said that their
income is not enough for their family’s needs; and 51.65 percent said
that their livelihood worsened compared with the previous year.
Obviously, the economic system has
failed to equitably distribute the increasing social wealth that the
economy has produced in the past years thus alienating the workers from
the supposed economic growth and from the fruits of their own labor. The
$1,400 GDP per capita (i.e. the value of domestic production as equally
divided among each Filipino) that the President projected this year is
meaningless because wealth is actually concentrated in a very small
section of society. According to the 2000 Family Income and Expenditure
Survey (FIES) of the National Statistics Office (NSO) only 28.83 percent
of the total number of families account for 65.24 percent of the total
national income while 71.17 percent share the remaining 34.76 percent.
The top two income classes, which represent only 13.23 percent of the
total number of families, account for 44.45 percent of the total
national income.
Poverty amid increased profits and
productivity
Thus, only this small portion of the
population felt whatever gains the economy has produced in recent years.
In concrete terms, capitalist profits have been growing tremendously
while workers’ pay has remained depressed. Between 2001 and 2005, for
example, the net income of the biggest 1,000 corporations in the country
expanded by 327.23 percent with an annual growth of 37.86 percent while
their gross profit margin has steadily increased during the same period
averaging 19.56 percent per year. Profits rose remarkably as labor
productivity (or the average value created by each worker in a given
period) went up by 34.64 percent in nominal terms and 10.23 percent in
real terms between 2001 and 2005 based on figures from the National
Wages and Productivity Commission (NWPC).
On the other hand, the minimum wage has
barely moved since the Arroyo government took over. Data from the NWPC
show that from 2001 to 2006, the minimum wage (including the cost of
living allowance or COLA) in all regions of the country fell by 3.96
percent in real terms. In nominal terms, the minimum wage has increased
by almost 23.66 percent during the same period but this was not enough
to cope with the increase in cost of living. Using the family living
wage of the NWPC as standard, the daily cost of living in all regions
for each family has grown by 51.57 percent between 2001 and 2006.
This only means that while capitalists
get richer from the sweat of labor, workers and their families become
even poorer. In 2006, the average daily minimum wage (with COLA) for all
regions was P229.35 which was short of P447.98 to meet the estimated
daily cost of living (i.e. family living wage computed by NWPC) for all
regions of P677.33. The gap between the minimum wage and the cost of
living has widened by 72.27 percent between 2001 and 2006, increasing by
11.60 percent annually during this period.
Wrong economic policies
These statistics, culled from government
agencies, strongly support the argument for a P125-wage hike. They show
that going by the economic fundamentals, there is a reasonable basis for
a substantial increase in workers’ pay.
More importantly, they also illustrate
the moral urgency of a wage hike to give the direct producers of social
wealth and their family some breathing space from seething poverty
worsened by the relentless attack of price hikes, tax increases,
diminishing public spending for social services, etc. that no longer
allow the worker to stand up every morning to work and live.
They belie the doomsday scenario
repeatedly raised by the business sector, and loyally echoed by
President Arroyo and her economic managers that a substantial wage
increase would result in massive bankruptcy, widespread displacement,
high inflation, and overall economic slowdown. This doomsday scenario is
actually already a reality that Filipino workers are forced to face
everyday and Mrs. Arroyo has only her own economic policies to blame.
Thousands of small local firms become
bankrupt due to lack of government support and undue exposure to foreign
competition. From January 2001 to June 2006, for instance, 3,540 firms
closed shop or reduced their workforce because of competition,
displacing 105,010 workers in the process; due to financial reasons:
3,902 affected firms with 91,345 displaced workers; and due to
reorganization: 7,826 affected firms with 113,109 displaced workers. In
contrast, only 104 firms closed shop or reduced their workforce that
displaced 1,793 workers due to minimum wage adjustments in the last six
years.
Inflation rate, meanwhile, has been on
the rise averaging 5.55 percent annually from 2001 to 2006 as utilities,
for instance, are monopolized, privatized, and deregulated. During this
period, Meralco rates for residential users have jumped by 51.82
percent; water rates in Metro Manila have increased by 259.37 percent (Maynilad)
to 333.54 percent (Manila Water); and diesel pump prices have soared by
150.36 percent.
Social payback
President Arroyo must undo her economic
mismanagement if she seriously wants to reverse the trend of bankruptcy,
displacement, and spiraling prices and not further burden the poor
workers by sabotaging HB No. 345 (and its Senate counterpart – Senate
Bill 2030 that proposes a one-time P100-wage hike).
If Mrs. Arroyo wants to talk about
“social payback from the booming economy”, the only acceptable and
meaningful social payback that Filipino workers deserve today is a
substantial increase in what they take home to spend for the daily needs
of their families. And even this is not enough as current wage hike
proposals would still not enable many families to meet the decent living
standard. Thus, it must be complemented with price control reforms, tax
reforms (i.e. repeal the regressive VAT on socially sensitive products
and services), and drastic increases in spending for education, health,
housing, and other social services.
Of course, the ordinary Filipino worker
knows too well that the President and the capitalist class she protects
and represents will not give the substantial wage hike demand on a
silver platter. It took more than seven years since the P125 campaign
was launched before Congress can even pass a bill on it. HB No. 345 is
nonetheless an initial victory, even as it paves the way for more
struggles– to consolidate and strengthen the rank of workers and further
expose and weaken the rotten regime– that can only be won through
uncompromising militancy. IBON Features / Posted by Bulatlat
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