Philippine MSMEs cannot afford wage increase amid pandemic

Employers Confederation of the Philippines (ECOP) believes that raising daily wages by P100 (US$2.1) will likely result in more unemployment.
By: | February 16, 2021

ECOP president Sergio Ortiz-Luis Jr said, “The P100 wage increase was requested for a number of years. It did not prosper before the pandemic hit, much more now with the coronavirus? The chances are very nil that it will prosper.” 

He added that some micro, small and medium enterprises (MSMEs) have remained closed, some are still deciding on when or if their businesses will reopen, while others have adopted the practice of rotating their workers.  

Even large businesses have not been spared the brunt of the pandemic with some streamlining while others have already shuttered. 

To prevent closure of more companies, Ortiz-Luis Jr said the Department of Labor and Employment (DOLE) has allowed employers to negotiate wage reduction with their workers provided the latter are not getting salaries below the minimum wage. 

A wage hike, particularly during a period when the economy is still recovering from the pandemic, is “not a good signal to foreign investors,” said Ortiz-Luis Jr, who is also president of Philippine Exporters Confederation Inc (PHILEXPORT). 

He said there is a need to further reopen the economy especially with the reopening of mass transportation so more people can get hired. 

He said one of the reasons exporters are unable to add workers to report for work is the lack of mass transportation, citing the result of the group’s survey on exporters. 

Earlier, labour group Partido Manggagawa (PM) had called for wage hikes and a new round of cash handouts. 

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PM national chairperson Rene Magtubo said the working poor and unemployed Filipinos need immediate relief amid the rise in prices of food and job losses. 

The group said a P100 across-the-board wage hike for workers will help recover some lost purchasing power, adding that the nominal wage of P537 (US$26.9) in Metro Manila has already been eroded to P434 (US$21.8) in real wage terms, according to Manila Bulletin.