Bulatlat.com

Despite the recent increase in minimum wage, the gap between wages and cost of living will still be so wide that having two minimum wage earners still cannot provide for a family’s basic needs. Even three minimum wage earners may not be enough, depending on the person’s actual take-home pay (i.e., net income after tax and other deductions).

The Regional Tripartite Wages and Productivity Board (RTWPB) decided last June 23 to increase the daily minimum wage rate of Metro Manila workers by P20 ($0.36, based on an exchange rate of P56.095 for every US dollar). As soon as the Wage Order No. NCR-10 gets published in a newspaper of general circulation, it will take effect 15 days after. Is there now reason to celebrate? Is this a victory for organized labor?

In deciding the wage hike, RTWPB Chair Ciriaco A. Lagunzad III said, “the Board found a need to provide for an increase in the daily ECOLA to alleviate the plight of the workers and employees in the private sector without impairing the viability and competitiveness of business and industry.”

At present, the daily minimum wage rate in Metro Manila is pegged at P280 ($4.99), with the basic wage of P250 ($4.46) and emergency cost of living allowance (ECOLA) of P30 ($0.53). Through the new wage order, the ECOLA becomes P50 ($0.89), making the total daily minimum wage rate in Metro Manila P300 ($5.35).

Since the enactment in 1989 of Republic Act No. 6727, also known as the Wage Rationalization Act, there have been nine wage orders that took effect, resulting in 13 wage increases. The last happened in February 2002 when the ECOLA was increased. So far, the highest increase in the basic wage happened in 1999 when the RTWPB granted a P25.50-hike ($0.45) in the daily minimum wage. (See Table)

Once it takes effect, the new minimum wage translates to a gross pay of P6,600 ($117.66) monthly, assuming a person works for only 22 days in a month (i.e., Monday to Friday).

As of February 2004, the National Wages and Productivity Commission (NWPC) pegged the family living wage in Metro Manila at P594 ($10.59) daily, which means that a family of six needs P17,820 ($317.67) in one month to meet food and non-food requirements.

This means further that despite the increase in minimum wage, the gap between wages and cost of living will still be so wide that having two minimum wage earners still cannot provide for a family’s basic needs. Even three minimum wage earners may not be enough, depending on the person’s actual take-home pay (i.e., net income after tax and other deductions).

Militant labor groups also assailed the increase as being reflected only in the ECOLA. With the basic wage retained at P250 ($4.46), the computation of, say, the 13^th month pay and overtime pay will still be the same. This implies that the wage increase will not have a concomitant increase in the worker’s benefits. That is assuming of course that the minimum wage is followed by employers – which it is not, according to the labor department itself.

In the context of purchasing power, the real value of one peso in Metro Manila as of May 2004 is P0.5525 ($0.01). In real terms, therefore, the daily minimum wage rate of P300 ($5.35) only amounts to P165.75 ($2.95). Given that the base year in computing the purchasing power is 1994, this means that a person now needs P300 ($5.35) to buy goods and services that only cost P165.75 ($2.95) ten years ago.

The statistics clearly show that the wage hike is insignificant, and it should be a basis for organized labor to demand a substantial increase.

Analyzing the composition of 30.4-million employed persons as of April 2004, there were only 14.6 million wage and salary workers. This implies that the new wage order only applies to 48.1 percent of employed workers, as the majority of them are either own-account workers (11.7 million) or self-employed (4.1 million).

As if this is not enough, the Department of Labor and Employment (DoLE) stressed that the share of workers and employees in the increase of tuition of private educational institutions for school year 2003-2004 is considered as “compliance with the new ECOLA. Those which did not increase tuition…may defer compliance with the Order.”

In addition, the RTWPB may also “dismiss or grant in full or partial the exemption” of the following: micro-business enterprises; financially distressed establishments; businesses facing potential losses; and retail and service establishments not having more than 10 workers.

With this situation, organized labor quite understandably dismissed the latest wage order as not having an impact on their already unrewarding toil. Ironically, the recent wage hike shows a bias against the intended beneficiaries. Bulatlat.com

Daily MinimumWage Rates National Capital Region (NCR) 1989 to 2002 (in Philippine peso)
Effectivity Date	Basic Wage	Allowance	Total
July 1, 1989	89.00		89.00
November 1, 1990	106.00		106.00
January 8, 1991	118.00		118.00
December 16, 1993	135.00		135.00
April 1, 1994	145.00		145.00
February 2, 1996	161.00		161.00
May 1, 1996	165.00		165.00
February 6, 1997	180.00		180.00
May 1, 1997	185.00		185.00
February 6, 1998	198.00		198.00
October 31, 1999	198.00-223.50		198.00-223.50
November 1, 2000	213.00-250.00		213.00-250.00
November 5, 2001	213.00-250.00	15.00	228.00-265.00
February 1, 2002	213.00-250.00	30.00	243.00-280.00
Source: National Wages and Productivity Commission (NWPC) Note: From 1999 to 2002, there was a distinction between wages of agriculture (plantation and non-plantation) and non-agricultural workers.