The Philippine Online Chronicles

Companies can afford to grant wage hikes for workers if they allow a cut in their substantial profits, according to independent think tank IBON foundation.

IBON noted that “the economy actually has more than enough profits to support workers’ call for a P125 wage increase.”

“Government data show that establishments in the country with total employment of 20 and over had combined profits of P895.2 billion and 2.74 million employees, according to the preliminary results of the 2008 Annual Survey of Philippine Business and Industry (ASPBI) of the National Statistics Office (NSO),” IBON posted in a statement.

Profits of the country’s top 1,000 corporations jumped by 21 percent and investments by 15 percent per year throughout the previous administration. Their total earnings amounted to P3.1 trillion, with only P1 trillion reinvested and P2.1 trillion going to profits.

Based on IBON’s estimate, an additional P125 in the daily wages cost P3,802 per month, and employers will spend an additional P49,427 per employee per year (assuming 13 months of pay).

“The total cost of the proposed wage hike will only be P135.6 billion which, subtracted from total profits, will still leave establishments with P759.6 billion in profits. This is only a 15.1 percent cut in their profits.”

“Giving a P125 wage hike in NCR will cost employers P61.0 billion and reduce their profits by only 17.3 percent, from P352.1 billion to P291.1 billion. Average profit per establishment in the NCR will only fall by P6.8 million and still leave them with an average of P32.2 million in profits each.”

According to IBON, the situation is even more straightforward for the country’s largest corporations. The Top 1,000 corporations in the country combined annual net income increased from P116.4 billion in 2001 to P756.0 billion just in 2009, with a cumulative P3,788.9 billion over the period 2001-2009.

Workers are demanding for a legislated P125 wage increase as a relief to the successive oil price hikes and increasing cost of products and services. The last wage adjustment granted by the regional wage boards was in July last year, ranging from P5 to P22.

Based on labor laws, “wages may not be increased within a year after the previous increase, except when there is a supervening event, such as runaway inflation and steady increase of basic commodities.”

The National Wages and Productivity Commission (NWPC) said it the National Capital Region wage board approved a resolution declaring a "supervening event" of continuing increases in the prices of crude oil and local petroleum products to merit a wage increase.

It recognized that there is strong clamor from sectors to review the wages and conduct hearings.

Labor Secretary Rosalinda Baldoz said the wage boards will conduct public hearings and will deliberate on the amount and what form of increase – either through wage hikes or additional cost of living allowance. She added that the boards will come up with decisions by May 1, Labor Day.

Hands off on wages

President Benigno Noynoy Aquino III said he cannot dictate wage hikes. He further admitted he can’t act on the wage hike demand, “stressing the matter is not within his powers.”

Malacanang earlier rejected the P125 wage hike demand of workers and said a wage increase at this time will be inflationary.

Presidential spokesperson Edwin Lacierda said “the regional wage boards have the duty and obligation to determine the proper wages in their respective regions."

"It’s not that the President has no power but the wage boards themselves have the power to do so. The President does not need to be involved in determining when or how much the wage should be,” he added.

Business group Employers Confederation of the Philippines (ECOP) said a wage adjustment would trigger spiraling production costs and prices of commodities. “Wages and inflation would chase each other with workers at the losing end. Disturbing wage levels at this time may not be a prudent move considering that fuel prices remain volatile in the world market.” said ECOP President Edgardo Lacson.

Political will

But a workers group challenged Aquino to exercise political will on the wage hike issue. “If the president really wants a substantial wage hike implemented, he has to go beyond the regional wage boards. “Workers don’t need coins from the wage boards. We want a legislated across the board wage increase!” said labor leader Elmer Labog of Kilusang Mayo Uno.

The Catholic Bishops Conference of the Philippines (CBCP) echoed the workers’ call. “There should be an increase and it should be decent because everything seems to be increasing,” said Bishop Broderick Pabillo. He said the government should heed the calls of the workers to help address financial difficulties.

On May 1, workers will celebrate Labor Day and highlight their demand for a substantial wage increase.