Labor & employment

Wage hikes, slowest under Duterte

May 1 wage hikes

(UPDATED May 1, 2019) Did you know that among all post-EDSA presidents, the minimum wage has increased at the slowest pace under Pres. Rodrigo Duterte?

In his first three years in office, the minimum wage in NCR (non-agricultural rates and including allowance) has only increased by an average of 9.8 percent. At the start of his term, the minimum wage in NCR was Php454 to Php491 and are today pegged at Php500 to Php537.

During similar periods in their respective terms, the minimum wage in NCR has increased by 32.6% under Corazon Aquino (from Php89 to Php118); 22.9% under Fidel Ramos (from Php118 to Php145); 17.0% under Joseph Estrada (from Php198 to Php213-250); 13.1% under Gloria Arroyo’s first term as Estrada’s replacement (from Php213-250 to Php243-280) and 26.9% in her “second” term (from Php243-280 to Php313-350); and 16.1% under Benigno Aquino III (from Php367-404 to Php429-466).

Wage rates compared above are since the passage of the Wage Rationalization Act of 1989 (Republic Act 6727) and exclude wage adjustments on or before May 1, as reported by the National Wages and Productivity Commission (NWPC). The wage rates under Corazon Aquino cover her three last years in office since RA 6727 was passed in June 1989, while the period under Joseph Estrada includes wage rates up until his ouster in January 2001.

PH labor condition, worst in Southeast Asia

Filipino workers are worse off than most of their counterparts in Southeast Asia. Consider these comparative data culled from various regional and global institutions:

Unemployment is worst in the Philippines:

  • The Philippines has the lowest labor force participation rate at 60.7%, compared to Cambodia (86.6%); Vietnam (76.3%); Lao (74.5%); Brunei (69.5%); Indonesia (69.0%); Thailand (68.1%); Malaysia (68.0%); Singapore (67.7%); and Myanmar (61.5%), ASEAN Secretariat in its ASEAN Key Figures 2018 report (comparing 2017 data)
  • The Philippines has the highest unemployment rate at 6.6%, compared to Thailand (1.2%); Cambodia (1.6%); Lao (1.8%); Vietnam (2.0%); Myanmar (2.1%); Singapore (3.1%); Malaysia (3.4%); Indonesia (5.3%); and Brunei (6.1%), according to the ASEAN report.

Wages in the Philippines are among the lowest:

  • According to a 2018 survey of JETRO (Japan External Trade Organization), the base salary of a Filipino manufacturing worker at US$220 a month is much smaller than Malaysia (US$413); Thailand (US$413); Indonesia (US$296); and Vietnam (US$227).
  • Year-on-year wage hike for manufacturing workers in the Philippines in 2017-2018 and 2018-2019 averaged 4.8%, much slower than Indonesia (8.1%) and Vietnam (7.1%) that are already providing higher base wages to their manufacturing workers; and while faster than Malaysia (4.2%) and Thailand (4.2%), wages there are already almost twice compared to the Philippines, based on the JETRO survey.

Official poverty in the Philippines is among the highest:

  • Based on World Bank data from its Poverty and Shared Prosperity 2018 report, the mean consumption or income per capita in the Philippines is growing every year at just 1.4% (2009 to 2015), way behind Malaysia (5.9%, 2011 to 2015); Indonesia (4.8%, 2015 to 2017); Vietnam (3.7%, 2010 to 2016); and Thailand (3.0%, 2010 to 2015).
  • Comparing 2015/2016 national poverty incidence, the Philippines recorded the highest rate at 21.6%, according to the ASEAN Key Figures 2018 report. This was way higher than the poverty rates in Malaysia (0.4%); Vietnam (7.0%); Thailand (8.6%); and Indonesia (10.9%). ###
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2016 elections, Labor & employment

5 reasons why workers will reject “Daang Matuwid” in the May elections

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Photo from gettyimages.com

The “Daang Matuwid” regime of outgoing President Benigno Aquino III, which Liberal Party (LP) standard bearer Secretary Mar Roxas vows to continue, has been notoriously anti-worker throughout its six-year rule. Below are five reasons why Filipino workers will overwhelmingly reject the “Daang Matuwid” regime in the upcoming May 9 elections:

  1. Daang Matuwid opposed any meaningful increase in the daily minimum wage and further cheapened the already low wages of workers

Daang Matuwid has consistently opposed proposals for a substantial wage hike. Since 2010, the daily minimum wage in the Philippines has only increased by Php13 (Ilocos Region or Region I) to Php77 (National Capital Region or NCR). These adjustments are insignificant amid the soaring cost of living. For instance, in NCR where the minimum wage is the highest and which also posted the largest wage hike among all regions, the estimated cost of living jumped by more than Php114 during the same period, easily offsetting the Php77-adjustment in the minimum wage. Consequently, the already big gap between the daily minimum wage and the daily cost of living has even furthered widened under Daang Matuwid – from Php571 in 2010 to about Php608 today. This means that the capacity of workers and their families to meet basic food and non-food needs has been further eroded.

Worse, instead of a substantial wage increase, Daang Matuwid introduced the so-called two-tiered wage system that provided capitalists another tool in pressing down the pay of their workers. Under the two-tiered wage system, companies will give workers a basic floor wage, which is computed above the official poverty threshold but below the existing average pay. Employers can then voluntarily increase the basic floor wage depending on their own computation of the workers’ productivity. Such system means greater abandonment of government of its obligation to set wages that would allow workers and their families to achieve decent living while giving profit-seeking firms more freedom to exploit the workers.

  1. Daang Matuwid worsened the burden of workers with onerous taxes

Daang Matuwid oppressed Filipino workers with onerous taxes. Compared to other countries in Southeast Asia, the Philippines has the highest rates for income tax (5-32%) and for the value-added tax or VAT (12%). The tax system is so oppressive that that those earning about Php50,000 a month pay the same tax rate of 32% as the billionaires who own and run the country’s biggest conglomerates. Meanwhile, the regressive 12% VAT punishes the ordinary income earners as even the most basic goods and services are covered including water, electricity and petroleum products, which all directly impact on the standard of living and inflate the cost of other commodities.

There have been several proposals in Congress to correct this injustice but were rejected by the Daang Matuwid regime, dismissing them as populist and impractical measures. “Kung papogihan lang ito, wag na tayong mag-income tax,” Mar Roxas was quoted as saying. But the issue, of course, is much deeper than “papogihan” as a progressive tax reform system will allow a just distribution of wealth, help improve the living condition of many, and spur economic growth driven by domestic spending.

Another additional tax burden imposed on Filipino workers by Daang Matuwid is the so-called sin tax on alcohol and tobacco products. Guised as a measure to supposedly address health concerns caused by smoking and drinking (even as the national health budget remains grossly inadequate, state hospitals are being privatized, and poverty-related illnesses remain widespread amid low wages/incomes and lack of jobs), the sin tax in reality is primarily aimed at raising government revenues at the expense of ordinary income earners.

  1. Daang Matuwid rejected calls to increase the limited benefits enjoyed by workers such as their SSS pension

Just early this year, President Aquino vetoed the bill hiking the monthly pension (which has been at a paltry Php1,200 for almost two decades now) of 2.1 million members of the Social Security System (SSS). The Daang Matuwid regime justified its heartless decision by claiming that the SSS might go bankrupt if the proposed Php2,000-pension hike is implemented.

But as proponents of the pension hike led by Bayan Muna Rep. and Makabayan senatorial bet Neri Colmenares pointed out, SSS can avoid bankruptcy if it will improve its collection efficiency that currently stands at a dismal 35-38% (including an uncollected amount of Php13 billion as of 2014) and cut back questionable expenses such as massive bonuses for its board members (e.g. Php200 million in retirement package). The administrative cost of SSS at almost 7% of contributions is too high compared to other countries (e.g. Singapore’s 0.5% or Malaysia’s 2%). By stoking bankruptcy fears, the Daang Matuwid regime is also oblivious to its legally mandated obligation to replenish the SSS should it incur a deficit arising from the pension hike.

For the elderly workers, the Php2,000-pension hike means duly recognizing their contribution not only to the SSS fund but to the national economy while promoting their capacity to support themselves in their retirement.

  1. Daang Matuwid failed to address the jobs crisis and to promote the job security of workers

The Daang Matuwid regime would want us to believe that the jobs situation has improved under its watch. But nothing could be farther from the truth. While 692,000 jobs a year appear to have been created between 2010 and 2015, almost 7 out of 10 of the additional jobs were made in hotels, restaurants, call centers, malls, and other less productive sectors as well as in highly seasonal, contractual work like construction. In addition, research group IBON Foundation noted that job creation under Daang Matuwid is much weaker compared to previous years. Between 2000 and 2009, for instance, 732,000 jobs were created annually.

Chronic job scarcity is being concealed by distorted official employment data as government labor surveys tend to exclude jobless workers who have already been discouraged by lack of employment opportunities. Including such workers, IBON estimates that unemployment rate remains at double-digit with more than 4 million jobless workers today – or basically the same as the situation before Daang Matuwid took over.

A separate survey by the Social Weather Stations (SWS), on the other hand, shows that the number of jobless actually increased from an average of 9.5 million in 2010 to 9.8 million in 2015.

Also, four out of 10 workers are own-account and unpaid family workers that further illustrate the low quality of jobs in the country. Job insecurity, meanwhile, remains severe. IBON estimated that four out of 10 rank and file workers are in non-regular work – e.g., contractual, probationary, casual, seasonal, apprentice workers or agency-hired.

  1. Daang Matuwid continued neoliberal policies like PPP that resulted in higher prices and fees

Daang Matuwid’s centerpiece economic program – the public-private partnership (PPP) – is a continuation, expansion and deepening of the same neoliberal privatization policy started by the first Aquino administration in the 1980s. Under PPP, fares in the LRT 1 and 2 and MRT 3 have jumped by as much Php10 to 13. Among the most affected are the workers/employees and job seekers who comprise about 59% of LRT and MRT commuters. Another 32% are students mostly from working class families.

While the Daang Matuwid has vehemently opposed substantial wage hike, increase in SSS pension, and reduction in taxes, it has showered with generous perks the billionaire oligarchs who cornered PPP contracts. Under the LRT 1 PPP deal, for instance, the Daang Matuwid regime has given enormous benefits to the consortium of Ayala Corp. and the Manny Pangilinan group. Of the total project cost of Php64.9 billion, Daang Matuwid made the public shoulder Php34.9 billion or 54% of the total. Government share includes expenses for right of way acquisition, purchase of additional coaches, civil works and construction of depots. The Ayala-Pangilinan group also enjoys real property tax exemptions reportedly costing Php64 billion. ###

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