Edgardo Lacson, chairman of the Employers Confederation of the Philippines (ECOP), yesterday warned that distressed companies may face closure or resort to retrenching workers in the face of the P25/day wage hike approved for Metro Manila workers.
“It is more than the P20 a day (proposed by ECOP), if we follow the fluctuation in the Consumer Price Index or CPI prescribed by the Labor Code,” Lacson, a columnist of the Daily Tribune, said.
“Some companies that are financially distressed can apply for a one-year exemption (from the wage hike) which is allowed by law. But employers who can afford will comply with the P25 wage order,” he added.
Also the honorary chairman of the Philippine Chamber of Commerce and Industries (PCCI), Lacson said companies in Metro Manila which cannot afford to pay the mandated wage hike after being denied an exemption face two scenarios.
“First, defy the order and risk the P25,000 to P100,000 fine or four-year imprisonment, or both. Second, retrenchment of workers or business closure,” he explained.
The Associated Labor Unions-Trade Union Congress (ALU-TUCP) slammed the approved wage hike, a fourth of the P100 they sought. It said it will seek a dialogue with President Rodrigo Duterte.
The 25-peso increase would be “affordable” to micro and small enterprises, but the labor group said it would only be a “pittance” to medium and large businesses.
During a hearing of the Regional Tripartite Wage Board, ECOP cautioned that too big a wage increase may even jack up prices some more, aside from the possible loss of jobs cited by its chairman.
Prior to the approval of the wage increase in Metro Manila, Lacson maintained in his column that the Philippines already has the “highest minimum wage in Southeast Asia next to Singapore and Malaysia.”
“Out of the 42 million workers in the country’s workforce only less than 3million or 7 percent are receiving minimum wage. And more than 95 percent of these minimum wage earners are employed by MSME’s who are cost challenged.
“A wage order precipitates inflation as unscrupulous traders will take advantage to push up commodity prices immediately after a minimum wage order is published,” he wrote then.
When payroll cost is beyond the capacity of employers to pay, it will result in downscaling of operation, layoffs, or business closures, not to mention the disincentive to investors to expand or start a new business in the country, Lacson posited.
Meanwhile, analyst Mon Abrea said that aside from the capacity of employers and companies to pay wage hikes, the location of businesses should also be factored in on the computations.
He noted that while some companies are able and capable to pay higher wages, they opt to give out a smaller pay because they are outside Metro Manila.
“We believe that the big companies are able to pay higher wages but since they are outside Metro Manila, they just pay a smaller salary to workers. They can take it,” Abrea said.