Commentary
P125-Wage Hike and Arroyo’s Economic Boom
If Pres. 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 controls, tax
reforms, and drastic increases in social services spending
BY ARNOLD PADILLA
Ibon Foundation
Posted by
Bulatlat
In a televised forum on Edsa Dos’s sixth
anniversary, President Gloria Arroyo declared 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 which proposes an increase of P125 ($2.58 at an
exchange rate of $1=P48.305) in the daily minimum wage over a three-year
period.
Pres. 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.
But economics is not only about the
creation of wealth but its distribution as well. Thus for 2007, Pres.
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 Pres. Arroyo, who was a long-time economics professor
before she entered politics, seems too 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’
Pres. 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% 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% and posted 5.40% in
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% of the respondents
considered themselves poor; 62.80% said that their income is not enough
for their family’s needs; and 51.65% 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 Pres. Arroyo projected this year is meaningless
because wealth is actually concentrated in a very small segment of
society. According to the 2000 Family Income and Expenditure Survey (FIES)
of the National Statistics Office (NSO) only 28.83% of the total number of
families account for 65.24% of the total national income while 71.17%
share the remaining 34.76 percent. The top two income classes, which
represent only 13.23% of the total number of families, account for 44.45%
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% with an annual growth of 37.86% while their gross profit margin
has steadily increased during the same period averaging 19.56% 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% in nominal
terms and 10.23% in real terms between 2001 and 2005 based on figures from
the National Wages and Productivity Commission (NWPC).
On the contrary, 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% in
real terms. In nominal terms, the minimum wage has increased by almost
23.66% 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% 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 ($4.74) which was short of P447.98 ($9.27) to meet the
estimated daily cost of living (i.e. family living wage computed by NWPC)
for all regions of P677.33 ($14.02). The gap between the minimum wage and
the cost of living has widened by 72.27% between 2001 and 2006, increasing
by 11.60% annually during this period.
Wrong economic policies
These statistics, culled from government
agencies, strongly support the argument for a P125-wage hike. These
provide a reasonable basis for a substantial increase in workers’ pay.
But more importantly, these 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 price hikes, tax increases, diminishing
public spending for social services, etc.
They belie the doomsday scenario
repeatedly raised by the business sector, and loyally echoed by Pres.
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 already a reality
that Filipino workers are forced to face everyday and Pres. Arroyo only
has 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% 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%; water
rates in Metro Manila have increased by 259.37% (Maynilad) to 333.54%
(Manila Water); and diesel pump prices have soared by 150.36 percent.
Social payback
Pres. 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 Pres. 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 by price controls, 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 Pres. Arroyo 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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