Wage Hike: Legislated Or Otherwise

House Bill (HB) 345, granting a P125 across-the-board daily wage hike of workers, was passed by the House of Representatives on its second reading. The pay adjustment will supposedly be implemented in the following manner: P45 on October 1, 2006; P40 on October 1, 2007; and another P40 on October 1, 2008.

A legislated wage hike, however, might do more harm than good, to the employers, to the country’s economy, and to the workers themselves, who are supposed to be the ones to benefit from this measure.

Labor Sec. Patricia Sto. Tomas, attending a Senate budget hearing, made her views clear on this issue, citing the possible implications of a legislated wage hike. She also referred to the regional tripartite wages and productivity boards which were created to handle wage issues.

Lazada Philippines

If a legislated wage hike pushes through, it could trigger massive layoffs of workers, and even the closure of businesses, by employers who might not be able to sustain the wage increase. Hardest hit would be our small and medium enterprises (SMEs) which are still struggling amid soaring oil prices. SMEs employ a sizable portion of our labor force, which face the possibility of unemployment with the implementation of the law.

While the rising costs of living seem to justify a wage hike, an unconscionable one could also drive up inflation levels due to higher labor costs.

A better solution might be to let the regional wage boards handle the issue and come up with a reasonable wage hike that balances the interests of the workers with the capacity of their employers to compensate them. Non-wage benefits, which will help increase the spending power of the workers, might also be considered.