Foreign biz group cites negative effects of wage hikes
MANILA, Philippines – The Joint Foreign Chambers of the Philippines (JFC) is not in favor of an across-the-board wage hike in the National Capital Region (NCR), saying this will result in layoffs, relocation of foreign investors and higher inflation.
In a position letter sent to Regional Wages and Productivity Board Chairman Alex Avila, the JFC said "wage levels must not result in job loss, as investors avoid the Philippines in favor of other countries with lower labor costs and local markets sell more imported than locally made products."
The JFC is composed of 7 major foreign investor groups in the country, namely, the American Chamber of Commerce, the Australian-New Zealand Chamber of Commerce, the Canadian Chamber of Commerce, the European Chamber of Commerce, the Japanese Chamber of Commerce and Industry, the Korean Chamber of Commerce and the Philippine Association of Multinational Companies Regional Headquarters.
The group instead stated its support for the new wage policy, the two-tiered wage system.
It encourages wage boards to transition to the new wage system as soon as possible especially since the second tier recognizes the need to reward workers for their productivity.
Though the JFC recognizes the rationale of the government to maintain a minimum wage to protect vulnerable workers, a further increase is deemed uncompetitive.
The letter said that the daily cost to maintain an unskilled worker in Metro Manila exceeds P500 already. This includes P426 minimum wage in addition to P30 COLA plus the employer’s obligations for SSS, Phil Health, Pag-Ibig and over-time pay, among others.
Though results of a wage increase may address problems in the short run, the JFC said long-term effects would have adverse consequences, including:
- layoffs, especially among micro, small and medium enterprises
- relocation of foreign investors to other more competitive countries
- higher inflation
More than increased minimum wage, the JFC believes that the real problem in the labor sector is unemployment and underemployment. The country has "a total of over 3 million unemployed and some 12 million underemployed.”
With this, the JFC ultimately believes that “compensation should be tied to productivity as determined by enterprise-level conditions.”
JFC’s position paper was also forwarded to DOLE Secretary Rosalinda Baldoz, DTI Secretary Gregory Domingo, DOF Secretary Cesar Purisima, NEDA Director General Arseanio Balisacan and NCC Co-Chair Guillermo Luz. – Cecilia Cabiao, Rappler.com