MANILA — While the proposed P100 daily wage hike sounds good, leading economists in the House of Representatives have warned that such a proposal may hurt micro, small, and medium enterprises (MSMEs), which comprises a huge chunk of businesses in the country.
Marikina 2nd District Rep. Stella Quimbo, Albay 2nd District Rep. Joey Salceda, and Deputy Speaker Rep. David Suarez explained that MSMEs might not be able to bear giving out minimum wages at around P700 — should a Senate bill seeking a P100 daily wage increase gets passed and is enacted into law.
Salceda said it would be good if the policy can only apply to big companies, but MSMEs would take a hit should it be implemented.
“If we can only do this for big companies, it’s okay but this would hit MSMEs eh, all of it would die. They cannot handle that, since 99 percent of our enterprises are MSMEs,” Salceda said.
“Because some MSMEs cannot cope with the P600 per day [salary]? So instead of having employees, instead of employees getting the minimum wage, employers might remove workers just so they can comply with the P700 [per day],” he said.
Quimbo, an economics professor at the University of the Philippines, explained that such a wage increase may be inflationary since companies would just pass on the burden of hiking workers’ salaries to the cost of services or goods they offer.
“If we increase our minimum wage, this means this is for all firms, so what do you think happens? Companies would pass wages on to the price of goods. That’s why we can expect it to be inflationary. So we would have a cost-push inflation,” Quimbo said.
“So eventually their salary increases would be eaten by higher cost of commodities,” she added.
Suarez, meanwhile, said that small shops would be forced to either fire one of their employees just to implement the wage hike, or worse, close shop because they are unable to comply with the higher salaries.
“For the past five years I’ve been defending the budget of DOLE (Department of Labor and Employment) and that has been a perennial question. And I think the answer of Joey (Salceda) hits it direct to the point, we have a mechanism to address minimum wage […] and they’re all working,” he said.
“For example you have a cell phone repair business. You have four workers. But when you increase their salaries it’s either you will reduce your workforce, or you will close shop. So I mean it sounds nice, it feels nice, but once it gets there, it might not be very nice,” he added.
On February 7, Senate Bill No. 2534 which proposes a P100-daily minimum wage increase for private sector workers was forwarded to the Senate plenary, has
Senate committee on labor, employment, and human resources development chair Senator Jinggoy Estrada said that increasing the wages would help Filipinos cope with the burden of high prices of goods.
Salceda said he believes there is a need to increase salaries, but there should be a way for hikes to push through without harming small business. According to Quimbo, the answer may be in economic charter change (cha-cha) — the House’ advocacy of amending the 1987 Constitution’s economic provisions.
“Ako I am sympathetic really to wage hikes. Except that for one reason, 99 percent of our enterprise are MSMEs, so would you like to kill them? So that’s the only issue there, we need to increase, a more expansive macroeconomic environment and that can only come…,” Salceda said.
“With cha-cha. With econ(omic) cha-cha,” Quimbo quipped.
“(No), with foreign investments,” Salceda answered while laughing.
The House has been pushing for economic amendments to the 1987 Constitution, which they believe would usher in foreign investments. Currently, the Senate is tackling its own version of Resolution of Both Houses (RBH) No. 6 — a resolution calling for amendments, which has been approved by the House last March 2023. (Gabriel Pabico Lalu © Philippine Daily Inquirer)
