MANILA, Philippines - President Benigno S. Aquino III Tuesday rejected the proposed P125 legislated wage hike for private workers due to concerns it may lead to business shut down and job losses. He, however, announced an early pay increase for government employees.
In a meeting with representatives of labor organizations at the Palace as part of the Labor Day celebration, the President instead urged the regional wage boards to hasten the approval of salary adjustments for workers in the private sector to help them cope with the cost of living in the country.
Aquino likewise unveiled non-wage benefits for workers, including P11.2 billion-education assistance fund, while assuring that efforts are underway to stop the abuse in contractual labor scheme in the country.
The President, in his Labor Day address, calculated the risks of a legislative wage hike, saying it would amount to P1.4 trillion, or almost a fourth of the country's P8-trillion economy. He warned that businessmen may raise prices of their products or cut costs through laying off employees just to make up for their losses.
"Has anybody explained that there are 527,000 Filipinos who could lose jobs this year and next year if this is implemented?" the President asked in Filipino.
He pointed out that the country's minimum wages are actually higher at $9 to $10 a day, compared to the $2 in Cambodia, $2.24 to $3.21 in Vietnam and $3.05 to $5.27 in Indonesia.
"If we increase the salary gap from these countries, who will dare invest in our country if Cambodia has $2 minimum wage while we have $9 minimum wage? This might only derail the growth of our economy," he said.
He also explained that a legislative wage increase goes against one of his goals to improve the country's labor industry which is to keep jobs in the country. The three other goals to address unemployment are to generate new jobs, improve the skills of workers, and enforce the laws protecting the welfare of the laborers.
Aquino said it was prudent to let salary adjustments for private workers go through the regional tripartite boards than Congress. "I've asked them to hasten their consultations with the unions so they can issue new wage orders as soon as possible," he said.
In 2011, the President noted that salaries increased by 5.4 percent, higher than the country's inflation rate of 4.8 percent.
In the same speech, the President expressed reluctance to endorse House Bill No. 4853 that seeks to eliminate subcontracting arrangement, unless it is amended. Aquino said the existing bill can benefit 1.8 million contractual workers but may also result in layoff of 10.3 million workers.
"Is this really a solution or is it an additional problem for us? We are not closing our doors. We will take a look if the bill can be amended," he said. Aquino directed the Tripartite Industrial Peace Council to study the proposal and propose some amendments.
To eliminate the abuse in the contractual labor scheme, the President assured that the Department of Labor and Employment (DOLE) will deploy 596 inspectors to check the compliance of companies to the country's labor rules on security of tenure.
He noted that the labor department issued Department Order 18-A that stops contractual work terms of six months or less. This was the government's action to put an end to increasing abusive practice of service contracting known as "5-5-5," according to the President.
Although there was no wage hike for private sector, the President announced that government workers will get their salary increase this June, a month ahead of schedule, in time for the school enrollment. The government plans to spend P2.7 billion for the implementation of the fourth tranche of the Salary Standardization Law 3.
Aquino said he and Cabinet officials, on the other hand, would have to wait for July before any wage increases take effect.
"I hope that private employees would not feel bad about this. We know that the salaries of government workers have been lagging behind," he said.
On the non-wage benefits for workers, the President said the government has set aside P1.1 billion for Training for Work Scholarship program that seeks to enhance the competitiveness of Filipino workers in tourism, agriculture, business process outsourcing, and electronics industries.
He said both the Social Service System and Government Service Insurance System are ready to release P11.2 billion for an education assistance fund so poor households can send their children to school.
After the Labor Day meeting with labor groups in the Palace, the President visited the labor and livelihood fair at the World Trade Center in Pasay City.
Metro Manila age Hike
While no wage hike was announced for private workers, the DOLE announced that employees in Metro Manila could expect an additional pay next month after the regional wage board in the National Capital Region (NCR) said it will soon issue a new wage order.
Labor Secretary Rosalinda Baldoz, at the sidelines of the Labor Day celebrations, said the wage boards are already conducting their public consultations to meet its target of issuing a new wage order by the end of this month.
Under the wage rationalization act, the regional wage boards could not issue two consecutive wage orders in its jurisdiction in a year unless it has a "supervening condition."
The order will take effect by the first week of June or 15 days after it has been published in a national newspaper.
The Regional Tripartite and Wages and Productivity Board in NCR said it is also eyeing to adopt the two -tier wages system, which is currently being pilot-tested in Region 4-A, once the new wage order becomes effective.
With the new system workers will receives a mandatory floor wage and productivity-based pay.
A source from DOLE, who requested anonymity for lack of authority to speak about the issue, said the wage order for NCR will be in the form of a cost of living allowance (COLA), which would range from P25 to P30.
Baldoz also said the regional wage boards are also fast-tracking the issuance of a new wage hike at the Cordillera Administrative Region (CAR) and Regions 1 and 3.
The regional wage boards have already issued wage orders for Regions 6, 2, 12, 5 and 4-A for this year. (With a report from Samuel P. Medenilla)