Calling a spade
Business World, 21 March 2012


It is with great relief that I report to the Reader that there is one recent issue with which I am in complete agreement with the President: his refusal to consider the P125-a-day across-the-board wage hike proposed by party list organizations such as Bayan Muna, Gabriela, Anakpawis, Kabataan, and ACT.

Just a quick, back-of-the-envelop calculation will show how ridiculous the wage hike proposal is: A P125-a-day increase represents a minimum of 29.3% increase (for non-agriculture in NCR) and a maximum of 53.9% increase (for both agriculture and non-agriculture in ARMM). This would be coming less than a year (for some regions, as little as four months) after the last P22 wage increase granted in the form of a Cost of Living Allowance. Moreover, the inflation rate last month (February to February) was 2.7%. Thus the wage increase asked for is more than 10 times the percentage increase in prices.

With respect to the idea of reverting to across-the-board (national) wage increases, the proposal is about as anachronistic as one can get, considering that the country decided on regional wage boards more than twenty years ago. The idea at the time was to move from regional to provincial and even municipal wage boards — or better still, to go as close as possible to negotiations at the enterprise level.

Since there is no logic behind either of the proposals, one can only surmise that they are ideologically based.

Reading the Explanatory Note of the proposal (House Bill No. 375), one discovers some interesting things. Apparently, for example, P125 is a magic number because a P125 wage increase was first proposed in 2001 by the late Cristin “Ka Bel” Beltran, who continued to press for it regularly until his death in 2008. It is noteworthy that, in November 2001, the NCR minimum wage ranged from P228 to P265. By May 2011, the minimum wage was P389-P426, for an increase of P161.

On the average, it doesn’t look like there has been an increase in the average real wages from 2000, but it doesn’t look like there has been any decrease either. In other words, productivity of unskilled laborers seems to have remained the same — either that, or any increase has not been reflected in their wages. Isn’t it time for the National Wages and Productivity Commission to determine what is the real situation?

The Explanatory Note further states out that our Constitution points out that, among others, all workers should be entitled to a living wage. That is absolutely correct, just as it says that the State shall promote full employment (which of course may be in conflict with the first mandate, particularly if the living wage is greater than the market-clearing wage rate). But there is nothing in the Constitution which defines a “living wage” as one that is sufficient to support a six-member family, composed of the worker, the worker’s spouse, and four children. And yet, that is what the bill’s proponents assume, because they complain that the minimum wage in NCR is way below the P957 family wage, and even a P125 increase in wage will not suffice to bridge the gap.

Hold on for just a minute please. The latest employment data (January 2012) show 37.4 employed persons in the Philippines; at the same time, there are at present roughly 19.5 million families. That means that on the average there are a little less than two workers per family. So why should we assume that only one worker (assuming he is waged) to responsible for the family income?

But even if there were only one worker per family, how did the proponents of the bill arrive at the conclusion that a family living wage in the NCR region, as of June 2010, was P957 per day for a family of six?

Think of it, Reader. P957 a day comes out to P349,000 a year. Compare this to the average income of families in the NCR of P227,000. That means that, per the proponents logic and statistics, a minimum wage worker in NCR, just to have a “family living wage,” should be earning an amount that is one and a half times that of the average Metro Manila family.

Something has to be terribly wrong somewhere. But Congressman Mariano assured me that those figures were obtained from the National Wages and Productivity Commission (NWPC), so I decided to check with that agency on how the estimate was arrived at.

Therein lies a really interesting tale. But in the interest of brevity, let me just say that Mr. Henry Kakazu of the NWPC told me that the last time the numbers were actually provided by the NSO in 1994, and all they did since was to factor in inflation. The latest estimate they have was for September 2008, where the “family living wage” was calculated at P917 per day.

Here’s how: P232 for food expenditures, P601 for non-food, plus 10% of the subtotal for savings/investment, which rounds off to P917.

The only problem there is that the average expenditure for food, per the Family Income and Expenditure Surveys, comes out to 40% of a family’s total expenditures (the food budget for the poorest 30% of families is about 70% of total expenditures). Obviously, in the calculation above, the expenditure for food is only 25%, with 75% of the total going to non-food plus savings. So, I asked, where did that come from?

Mr. Kakazu referred me to the NSO, and I was referred to Mr. Florante Varona, who said that the figures came from the NSCB. So I called up my favorite NSCB person (aside from Sec. Gen. Romy Virola) Jessa Encarnacion. And she said that there was no way that the NSCB would come up with that kind of food-non-food distribution, much less a figure of that magnitude.

In other words, folks, nobody wanted to take responsibility for that “family living wage for NCR” figure. I will get to the bottom of it, of course, and tell you what I will find.

But in the meantime, it is unacceptable that that figure has been foisted on all of us, with everyone accepting it without a murmur. And has been used to show how exploited the worker is, how exploitative the employer is, and how horribly incompetent the government is. All three statements may be true — but the proof being used is unacceptable. Does that sound familiar