ECOP: P125 legislated wage hike costly

Posted at 02/17/11 8:39 PM

MANILA, Philippines - The Employers Confederation of the Philippines (ECOP) is opposing the P125 pay hike being pursued by party-list representatives in Congress, saying it is too costly.

The ECOP said the wage hike, if legislated, would translate to nearly P300 billion in additional expense for companies.

Of the amount, micro, small and medium enterprises (MSMEs) will bear the bigger chunk of over P188 billion, and the rest represents the additional cost for large enterprises.

The estimates were computed using the labor cost methodology of the Department of Labor and Employment (DOLE) statistics, ECOP said.

"Unquestionably, MSMEs will be the first ones to fall, considering that most of them could even barely cope with the periodic wage increases granted by the regional wage boards," ECOP said.

MSMEs, according to ECOP, employ 3.6 million wage and salary workers or 63% of the 5.7 million total wage employment in the formal sector.

ECOP, meanwhile, noted the pay adjustment via legislation, as proposed under House Bill No. 375, would undermine unionism and collective bargaining.

The group said the P125 across-the-board daily wage increase is equivalent to 31% of the highest prevailing regional minimum wage of P404 a day.

"But the increase, though, is not limited to the minimum but is multiplied across-the-board. In effect, this would also render the functions of the regional wage boards inutile as the various wage boards are mandated under Republic Act 6727, otherwise known as the Wage Rationalization Act, to set wages per region, sector or industry," ECOP said.

ECOP also said a legislated wage increase would aggravate the discrimination and inequity between the protected sector and the rest of the labor force.

"A massive across-the-board daily wage increase which is not productivity-based would result in higher cost of production of goods and services. However, enterprises could not just simply pass on the increased cost of goods to the market primarily because of the competition offered by low-cost imports and smuggled goods. In the process, companies which are unable to recover the increased cost of production would have no other choice but either to retrench or worse, close shop, or simply go underground, rather than risk severe penal sanctions," ECOP said.